Racial and Ethnic Differences in Longevity Perceptions and Implications for Financial Decision Making

40 Pages Posted: 1 Nov 2023

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

Multiple version iconThere are 3 versions of this paper

Date Written: June 22, 2023

Abstract

Inaccurate perceptions regarding life expectancy can lead to suboptimal financial decisions with long-term consequences, including undersaving prior to retirement and overspending during retirement. As prior research suggests that Covid-19 disproportionately harmed those with low-income, Blacks, and Hispanics in the United States, we seek to determine whether subjective survival perceptions among these groups changed in a manner consistent with observed outcomes. We fielded two online experimental surveys of US residents, one of which occurred at the outset of the pandemic, and the second, a year later. Using vignettes, we examine whether minorities’ perceptions regarding longevity at the outbreak were consistent with observed reality, and how these compared to members of the White majority population. Furthermore, the panel aspect of our study enables us to test whether and how these perceptions updated over time during the pandemic. Finally, we show how these perceptions related to advice regarding retirement saving and drawdowns.

Keywords: life expectancy; longevity risk; financial behaviors; minorities

JEL Classification: D1, D91, G41, G51

Suggested Citation

Hurwitz, Abigail and Mitchell, Olivia S. and Sade, Orly, Racial and Ethnic Differences in Longevity Perceptions and Implications for Financial Decision Making (June 22, 2023). Wharton Pension Research Council Working Paper No. 2023-18, Available at SSRN: https://ssrn.com/abstract=4617297 or http://dx.doi.org/10.2139/ssrn.4617297

Abigail Hurwitz (Contact Author)

Hebrew University, Jerusalem Israel ( email )

Mount Scopus
Jerusalem, 91905
Israel

Olivia S. Mitchell

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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