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The Geometry of Life Annuities

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  • Kingston, Geoffrey
  • Piggott, John

Abstract

Straightforward geometry can be used to explain the role for life annuities in smoothing individual consumption during retirement. In the aggregate, there is a surprising analogy with a standard diagram from trade theory. That diagram takes careful account of the government revenues foregone when there is a move from tariffs to free trade. Here the authors find a similar geometric interpretation of the proceeds from deceased estates which need to be accounted for when comparing a no-annuities economy with its annuitized counterpart. By the same token, there are considerable gains from opening up a market for life annuities, even after deceased estates are taken into account. Copyright 1999 by Blackwell Publishers Ltd and The Victoria University of Manchester

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  • Kingston, Geoffrey & Piggott, John, 1999. "The Geometry of Life Annuities," Manchester School, University of Manchester, vol. 67(2), pages 187-191, March.
  • Handle: RePEc:bla:manchs:v:67:y:1999:i:2:p:187-91
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    Cited by:

    1. Fehr, Hans & Habermann, Christian, 2008. "Welfare effects of life annuities: Some clarifications," Economics Letters, Elsevier, vol. 99(1), pages 177-180, April.
    2. Laps, Jochen, 2015. "Fully Funded Social Security Pensions, Lifetime Risk and Income," Working Papers 0603, University of Heidelberg, Department of Economics.
    3. Laps, Jochen, 2016. "Fully Funded Social Security Pensions, Lifetime Risk and Income," Annual Conference 2016 (Augsburg): Demographic Change 145587, Verein für Socialpolitik / German Economic Association.

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