What Matters in the Annuitization Decision?
28 Pages Posted: 4 Nov 2020 Last revised: 21 Jun 2021
Date Written: September 15, 2020
Abstract
We conduct a simultaneous test for several rational and behavioral factors, which have been
hypothesized to affect the uptake of life annuities on a sample of American individuals. In
addition, we investigate whether analysts’ short-term stock market expectations affect the
decision to annuitize retirement wealth. We provide evidence that the effect of such
expectations depends on the level of trust in them. We attribute our findings to the
availability heuristic and present bias. Lastly, we discuss the mediating role of annuity
antipathy. Our results provide guidance for policymakers and annuity providers as well as
venues for future research.
Keywords: Annuities Demand, Trust in Financial Analysts, Multiple Factors Test
JEL Classification: G11, J26
Suggested Citation: Suggested Citation