Pension Risk, Retirement Saving and Insurance
AbstractUsing a representative sample of Italian investors, we estimate the risk associated with pension benefits by eliciting for each individual the subjective distribution of the replacement rate as a summary indicator of social security wealth. We find substantial heterogeneity of pension risk and show that it is consistently related to observable features in the pension system that have different effects on individuals with different characteristics. We then relate subjective pension risk to individuals’ financial decisions. We find that people try to attenuate the adverse consequences of pension wealth uncertainty by increasing demand for targeted retirement saving and for insurance. Individuals facing more pension wealth risk tend to enroll more often in private pension funds, invest more in life insurance and buy more private health insurance. These effects are consistent with people becoming more risk-averse when pension wealth becomes less predictable, leading them to search for greater financial security.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 223.
Date of creation: 24 Apr 2009
Date of revision:
Pension Risk; Retirement Saving; Insurance;
Other versions of this item:
- Luigi Guiso & Tullio Jappelli & Mario Padula, 2009. "Pension Risk, Retirement Saving and Insurance," EIEF Working Papers Series 0902, Einaudi Institute for Economic and Finance (EIEF), revised Apr 2009.
- Luigi Guiso & Tullio Jappelli & Mario Padula, 2009. "Pension Risk, Retirement Saving and Insurance," Economics Working Papers ECO2009/18, European University Institute.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
This paper has been announced in the following NEP Reports:
- NEP-AGE-2009-05-02 (Economics of Ageing)
- NEP-ALL-2009-05-02 (All new papers)
- NEP-HEA-2009-05-02 (Health Economics)
- NEP-IAS-2009-05-02 (Insurance Economics)
- NEP-LAB-2009-05-02 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jappelli, Tullio & Pistaferri, Luigi, 2001.
"Tax Incentives and the Demand for Life Insurance: Evidence from Italy,"
CEPR Discussion Papers
2787, C.E.P.R. Discussion Papers.
- Jappelli, Tullio & Pistaferri, Luigi, 2003. "Tax incentives and the demand for life insurance: evidence from Italy," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1779-1799, August.
- Tullio Jappelli & Luigi Pistaferri, 2001. "Tax Incentives and the Demand for Life Insurance: Evidence from Italy," CSEF Working Papers 52, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Bottazzi, Renata & Jappelli, Tullio & Padula, Mario, 2006.
"Retirement expectations, pension reforms, and their impact on private wealth accumulation,"
Journal of Public Economics,
Elsevier, vol. 90(12), pages 2187-2212, December.
- Renata Bottazzi & Tullio Jappelli & Mario Padula, 2006. "Retirement Expectations, Pension Reforms, and Their Impact on Private Wealth Accumulation," CFS Working Paper Series 2006/10, Center for Financial Studies.
- Jonathan Gruber & David A. Wise, 2004.
"Social Security Programs and Retirement around the World: Micro-Estimation,"
National Bureau of Economic Research, Inc, number grub04-1, October.
- Jonathan Gruber & David A. Wise, 2002. "Social Security Programs and Retirement Around the World: Micro Estimation," NBER Working Papers 9407, National Bureau of Economic Research, Inc.
- Orazio P. Attanasio & Susann Rohwedder, 2003. "Pension Wealth and Household Saving: Evidence from Pension Reforms in the United Kingdom," American Economic Review, American Economic Association, vol. 93(5), pages 1499-1521, December.
- Charles F. Manski, 2004. "Measuring Expectations," Econometrica, Econometric Society, vol. 72(5), pages 1329-1376, 09.
- Richard Disney & Sarah Tanner, 1999. "What can we learn from retirement expectations data?," IFS Working Papers W99/17, Institute for Fiscal Studies.
- Gollier, Christian & Pratt, John W, 1996. "Risk Vulnerability and the Tempering Effect of Background Risk," Econometrica, Econometric Society, vol. 64(5), pages 1109-23, September.
- Adeline Delavande & Susann Rohwedder, 2008. "Eliciting Subjective Expectations in Internet Surveys," Working Papers 589, RAND Corporation Publications Department.
- Jeff Dominitz & Charles F. Manski, 2006. "Measuring Pension-benefit Expectations Probabilistically," LABOUR, CEIS, vol. 20(2), pages 201-236, 06.
- Feldstein, Martin & Pellechio, Anthony, 1979. "Social Security and Household Wealth Accumulation: New Microeconometric Evidence," The Review of Economics and Statistics, MIT Press, vol. 61(3), pages 361-68, August.
- Orazio P. Attanasio & Agar Brugiavini, 2003. "Social Security And Households' Saving," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 1075-1119, August.
- Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
- Adeline Delavande & Susann Rohwedder, 2010. "Individuals' Uncertainty about Future Social Security Benefits and Portfolio Choice," Working Papers 782, RAND Corporation Publications Department.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lia Ambrosio).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.