How Risky is Pension Wealth?

41 Pages Posted: 1 Dec 2010

See all articles by Luigi Guiso

Luigi Guiso

Einaudi Institute for Economics and Finance (EIEF)

Tullio Jappelli

University of Naples Federico II - Department of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Center for Studies in Economics and Finance - CSEF

Mario Padula

University "Ca' Foscari" of Venice; CSEF

Date Written: September 10, 2010

Abstract

Using a representative sample of Italian investors, we estimate the risk associated with social security benefits by eliciting for each individual the subjective distribution of the replacement rate as a summary indicator of social security wealth. Pension risk varies across individuals in a way that is consistent with what one can expect a priori, due to observable heterogeneity in information sets and in the way that people with different characteristics are affected by current pension schemes. In particular, individuals a long way from retirement and who thus face more career uncertainty report more subjective pension risk. We also find that individuals who report higher pension risk are more likely to enroll in pension funds and health insurance plans.

Keywords: pension risk, subjective probabilities

JEL Classification: H55, E21

Suggested Citation

Guiso, Luigi and Jappelli, Tullio and Padula, Mario, How Risky is Pension Wealth? (September 10, 2010). Netspar Discussion Paper No. 09/2010-066. Available at SSRN: https://ssrn.com/abstract=1716789 or http://dx.doi.org/10.2139/ssrn.1716789

Luigi Guiso

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Sallustiana 62
Rome, 00187
Italy
+39 06 4792 4858 (Phone)
+39 06 4792 4872 (Fax)

HOME PAGE: http://www.eief.it/faculty-visitors/faculty-a-z/luigi-guiso/

Tullio Jappelli (Contact Author)

University of Naples Federico II - Department of Economics ( email )

Via Cintia - Monte S. Angelo
Napoli, 80126
Italy

HOME PAGE: http://www.csef.it/people/jappelli.htm

Centre for Economic Policy Research (CEPR)

London
United Kingdom

HOME PAGE: http://www.cepr.org/researchers/details/rschcontact.asp?IDENT=106354

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Center for Studies in Economics and Finance - CSEF

84084 Fisciano, Salerno
Italy
+39 089 963 165 (Phone)
+39 089 963 169 (Fax)

HOME PAGE: http://www.csef.it/people/jappelli.htm

Mario Padula

University "Ca' Foscari" of Venice ( email )

Dorsoduro 3246
Venice, Veneto 30123
Italy
+390412349181 (Phone)
+390412349176 (Fax)

CSEF

Via Don Melillo I
Fisciano, Salerno, 84084
Italy

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