Testing Methods to Enhance Longevity Awareness

49 Pages Posted: 10 Mar 2021 Last revised: 20 Mar 2021

See all articles by Abigail Hurwitz

Abigail Hurwitz

Hebrew University, Jerusalem Israel

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

Orly Sade

Hebrew University of Jerusalem - Department of Finance

Date Written: November 2, 2020

Abstract

Many people have only a vague notion of the concept of life expectancy and the longevity risk they face at older ages, which in turn implies that they are likely to undersave for retirement. This paper employs an online experiment to investigate alternative ways to describe both life expectancy and longevity risk, with the goal of assessing whether these can raise peoples’ awareness of possible retirement shortfalls. We also evaluate whether providing this information promotes interest in saving activity and demand for longevity insurance products. We find that providing longevity risk information impacts respondents’ subjective survival probabilities, while simply describing average life expectancy does not. Yet providing life expectancy or longevity information significantly affects financial decisions, mostly regarding annuitization. Interestingly, we also find that merely prompting people to think about financial decisions changes their perceptions regarding subjective survival probabilities.

Keywords: retirement, annuity, longevity, life expectancy, behavioral economics

JEL Classification: G5, G4, J26

Suggested Citation

Hurwitz, Abigail and Mitchell, Olivia S. and Sade, Orly, Testing Methods to Enhance Longevity Awareness (November 2, 2020). Wharton Pension Research Council Working Paper No. 2021-07, Available at SSRN: https://ssrn.com/abstract=3801290 or http://dx.doi.org/10.2139/ssrn.3801290

Abigail Hurwitz

Hebrew University, Jerusalem Israel ( email )

Mount Scopus
Jerusalem, 91905
Israel

Olivia S. Mitchell (Contact Author)

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

University of Pennsylvania - The Wharton School, Pension Research Council ( email )

3302 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Orly Sade

Hebrew University of Jerusalem - Department of Finance ( email )

Mount Scopus
Jerusalem, 91905
Israel
972 2 588 3227 (Phone)

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