Testing Methods to Enhance Longevity Awareness

49 Pages Posted: 23 Dec 2022

See all articles by Olivia S. Mitchell

Olivia S. Mitchell

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

Orly Sade

Hebrew University of Jerusalem - Department of Finance

Abigail Hurwitz

Hebrew University, Jerusalem Israel

Multiple version iconThere are 2 versions of this paper

Date Written: December 21, 2022

Abstract

Many people do not understand the concepts of life expectancy and longevity risk, potentially leading them to under-save for retirement or to not purchase longevity insurance, which in turn could reduce wellbeing at older ages. We investigate alternative ways to increase the salience of both concepts, allowing us to assess whether these change peoples’ perceptions and financial decision making. Using randomly-assigned vignettes providing subjects with information about either life expectancy or longevity, we show that merely prompting people to think about financial decisions changes their perceptions regarding subjective survival probabilities. Moreover, this information also boosts respondents’ interest in saving and demand for longevity insurance. In particular, longevity information influences both subjective survival probabilities and financial decisions, while life expectancy information influences only annuity choices. We provide some evidence that many people are simply unaware of longevity risk.

Keywords: retirement expectations; annuity; longevity; life expectancy

JEL Classification: G52, J32, D91

Suggested Citation

Mitchell, Olivia S. and Sade, Orly and Hurwitz, Abigail, Testing Methods to Enhance Longevity Awareness (December 21, 2022). SAFE Working Paper No. 375, Available at SSRN: https://ssrn.com/abstract=4308658 or http://dx.doi.org/10.2139/ssrn.4308658

Olivia S. Mitchell (Contact Author)

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

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

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

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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)

Abigail Hurwitz

Hebrew University, Jerusalem Israel ( email )

Mount Scopus
Jerusalem, 91905
Israel

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