Framing Longevity Income

Abstract

This paper analyzes the effect of framing on the stated demand for longevity annuities. We test whether longevity income framed as “insurance” is more attractive than longevity income framed as an “annuity,” since longevity income is consumption protection. In a sample of 1,425 respondents, we find that when the longevity insurance frame is shown before the longevity annuity frame, respondents are less likely to state a demand for a longevity annuity. In addition, we find that people with higher numeracy are less likely to succumb to longevity income framing effects.

Keywords: Annuities; Annuitization; Retirement Income; Expected Utility Theory; Framing; Longevity Insurance; Behavioral Finance; Longevity Income; Numeracy

JEL Classification: D10, D81, G22, G40