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Fear of ruin and longevity enhancing investment

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  • EECKHOUDT, Louis

    (---)

  • PESTIEAU, Pierre

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

Abstract

Rectangularization of the survival probability seems to be an ongoing process. It results from a higher concentration of the ages at death; but it can be reversed by a continuous increase in the limit of life time. In this paper, we assume that these two factors are endogenous and we show that risk averse decision makers exhibit a bias towards rectangularization. More specifically, the importance of the bias depends upon the intensity of the "fear of ruin" which is another measure of the degree of absolute risk aversion.

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File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2007_32.pdf
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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2007032.

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Date of creation: 01 May 2007
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Handle: RePEc:cor:louvco:2007032

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Related research

Keywords: longevity; fear of ruin;

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Cited by:
  1. LEROUX, Marie-Louise & PESTIEAU, Pierre & PONTHIERE, Grégory, . "Optimal linear taxation under endogenous longevity," CORE Discussion Papers RP -2268, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Pierre Pestieau & Gregory Ponthiere & Motohiro Sato, 2008. "Longevity, Health Spending, and Pay-as-you-Go Pensions," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(1), pages 1-18, March.
  3. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2008. "Optimal linear taxation under endogenous longevity," Working Papers halshs-00586241, HAL.
  4. Grégory Ponthière, 2008. "Unequal longevities and lifestyles transmission," Working Papers halshs-00586010, HAL.
  5. Marie-Louise Leroux, 2009. "Endogenous Differential Mortality, Non-Contractible Effort and Non Linear Taxation," CESifo Working Paper Series 2567, CESifo Group Munich.
  6. LEROUX, Marie-Louise & PESTIEAU, Pierre & PONTHIÈRE, Grégory, 2008. "Should we subsidize longevity?," CORE Discussion Papers 2008058, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. PESTIEAU, Pierre & PONTHIERE, Grégory, 2012. "The public economics of increasing longevity," CORE Discussion Papers 2012005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Pierre Pestieau & Grégory Ponthiere, 2012. "On the Policy Implications of Changing Longevity," CESifo Working Paper Series 3926, CESifo Group Munich.
  9. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2008. "Should we subsidize longevity?," Working Papers halshs-00586236, HAL.
  10. Pierre Pestieau & Grégory Ponthière, 2012. "The public economics of increasing longevity," Working Papers halshs-00676492, HAL.

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