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Redistribution by insurance market regulation: Analyzing a ban on gender-based retirement annuities

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  • Finkelstein, Amy
  • Poterba, James
  • Rothschild, Casey

Abstract

We illustrate how equilibrium screening models can be used to evaluate the economic consequences of insurance market regulation. We calibrate and solve a model of the United Kingdom's compulsory annuity market and examine the impact of gender-based pricing restrictions. We find that the endogenous adjustment of annuity contract menus in response to such restrictions can undo up to half of the redistribution from men to women that would occur with exogenous Social Security-like annuity contracts. Our findings indicate the importance of endogenous contract responses and illustrate the feasibility of employing theoretical insurance market equilibrium models for quantitative policy analysis.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 91 (2009)
Issue (Month): 1 (January)
Pages: 38-58

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Handle: RePEc:eee:jfinec:v:91:y:2009:i:1:p:38-58

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Web page: http://www.elsevier.com/locate/inca/505576

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Keywords: Insurance regulation Annuities Categorical discrimination Gender-based pricing;

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References

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Citations

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Cited by:
  1. Cannon, Edmund & Cipriani, Giam Pietro & Bazar-Rosen, Katia, 2014. "Surprising Selection Effects in the UK Car Insurance Market," IZA Discussion Papers 8172, Institute for the Study of Labor (IZA).
  2. Bovenberg, A.L. & Koijen, R.S.J. & Nijman, T.E. & Teulings, C.N., 2007. "Saving and investing over the life cycle and the role of collective pension funds," Open Access publications from Tilburg University urn:nbn:nl:ui:12-301942, Tilburg University.
  3. Raj Chetty & Amy Finkelstein, 2012. "Social Insurance: Connecting Theory to Data," NBER Working Papers 18433, National Bureau of Economic Research, Inc.
  4. Ben J. Heijdra & Laurie S. M. Reijnders, 2009. "Economic Growth and Longevity Risk with Adverse Selection," CESifo Working Paper Series 2898, CESifo Group Munich.
  5. Daniel McFadden & Carlos Noton & Pau Olivella, 2012. "Remedies for Sick Insurance," Working Papers 620, Barcelona Graduate School of Economics.
  6. Jeffrey Clemens, 2012. "Regulatory Redistribution in the Market for Health Insurance," Discussion Papers 11-011, Stanford Institute for Economic Policy Research.
  7. Georges Dionne & Casey G. Rothschild, 2014. "Economic Effects of Risk Classification Bans," Cahiers de recherche 1420, CIRPEE.
  8. Keith M. Marzilli Ericson & Amanda Starc, 2012. "Pricing Regulation and Imperfect Competition on the Massachusetts Health Insurance Exchange," NBER Working Papers 18089, National Bureau of Economic Research, Inc.
  9. Finkelstein, Amy & Poterba, James & Rothschild, Casey, 2009. "Redistribution by insurance market regulation: Analyzing a ban on gender-based retirement annuities," Journal of Financial Economics, Elsevier, vol. 91(1), pages 38-58, January.

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