Behavioral impediments to valuing annuities: complexity and choice bracketing / Jeffrey R. Brown (University of Illinois and NBER), Arie Kapteyn (University of Southern California, NBER and IZA), Erzo F.P. Luttmer (Dartmouth College, NBER and IZA), Olivia S. Mitchell (The Wharton School of the University of Pennsylvania and NBER), Anya Samek (University of Southern California) ; IZA Institute of Labor Economics
VerfasserBrown, Jeffrey R. ; Kapteyn, Arie ; Luttmer, Erzo F. P. ; Mitchell, Olivia S. ; Samek, Anya Savikhin
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, March 2019
Elektronische Ressource
Umfang1 Online-Ressource (34, A-15 Seiten) : Diagramme
SerieDiscussion paper ; no. 12263
 Das Dokument ist öffentlich zugänglich im Rahmen des deutschen Urheberrechts.
Behavioral impediments to valuing annuities: complexity and choice bracketing [1.61 mb]
Verfügbarkeit In meiner Bibliothek
Zusammenfassung (Englisch)

This paper examines two behavioral factors that diminish people's ability to value a lifetime income stream or annuity, drawing on a survey of about 4,000 adults in a U.S. nationally representative sample. By experimentally varying the degree of complexity, we provide the first causal evidence that increasing the complexity of the annuity choice reduces respondents' ability to value the annuity, measured by the difference between the sell and buy values people assign to the annuity. We also find that people's ability to value an annuity increases when we experimentally induce them to think jointly about the annuitization decision as well as how quickly or slowly to spend down assets in retirement. Accordingly, we conclude that narrow choice bracketing is an impediment to annuitization, yet this impediment can be mitigated with a relatively straightforward intervention.