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The Bequest Motive And Single People’S Demand For Life Annuities Author info | Abstract | Publisher info | Download info | Related research | Statistics CARLOS VIDAL-MELIA (UNIVERSITY OF VALENCIA, SPAIN)
ANA LEJÁRRAGA-GARCÍA (UNIVERSITY OF VALENCIA, SPAIN)
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The main objective of this paper is to go deeper into the “annuity puzzle” by introducing the altruistic and strategic bequest motive and determining whether this really is a relevant factor affecting the theoretical decision to purchase life annuities. With this end in view we develop an optimization model based on that first put forward by Lejárraga et al. [2002], then add to it elements from other models such as Friedman and Warshawsky’s [1990] and Jousten’s [1998 & 2001] which include the bequest motive. We also analyse welfare by calculating the equivalent wealth in different contexts: the possibility of having access to an actuarially fair life annuity or programmed withdrawal market, the incorporation of so-called market imperfections, and the inclusion of the hypothesis that the individuals already have part of their wealth in pre-existing life annuities.
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Paper provided by EconWPA in its series Public Economics with number
0405005.
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Length: 24 pages
Date of creation: 17 May 2004Date of revision:
Handle: RePEc:wpa:wuwppe:0405005Note: Type of Document - pdf; pages: 24Contact details of provider: Web page: http://129.3.20.41
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Keywords: Capitalization Pension Funds Phased Withdrawal Retirement Utility. Other versions of this item:
Find related papers by JEL classification: G23 - Financial Economics - - Financial Institutions and Services - - - Pension Funds; Other Private Financial Institutions H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
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