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Life expectancy as a constructed belief: Evidence of a live-to or die-by framing effect

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  • John Payne
  • Namika Sagara
  • Suzanne Shu
  • Kirstin Appelt
  • Eric Johnson

Abstract

Life expectations are essential inputs for many important personal decisions. We propose that longevity beliefs are responses constructed at the time of judgment, subject to irrelevant task and context factors, and leading to predictable biases. Specifically, we examine whether life expectancy is affected by the framing of expectations questions as either live-to or die-by, as well as by factors that actually affect longevity such as age, gender, and self-reported health. We find that individuals in a live-to frame report significantly higher chances of being alive at ages 55 through 95 than people in a corresponding die-by frame. Estimated mean life expectancies across three studies and 2300 respondents were 7.38 to 9.17 years longer when solicited in a live-to frame. We are additionally able to show how this framing works on a process level and how it affects preference for life annuities. Implications for models of financial decision making are discussed. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • John Payne & Namika Sagara & Suzanne Shu & Kirstin Appelt & Eric Johnson, 2013. "Life expectancy as a constructed belief: Evidence of a live-to or die-by framing effect," Journal of Risk and Uncertainty, Springer, vol. 46(1), pages 27-50, February.
  • Handle: RePEc:kap:jrisku:v:46:y:2013:i:1:p:27-50
    DOI: 10.1007/s11166-012-9158-0
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    References listed on IDEAS

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    Cited by:

    1. David Blake & Marco Morales & Jing Ai & Patrick L. Brockett & Linda L. Golden & Wei Zhu, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 319-343, April.
    2. Wu, Shang & Stevens, Ralph & Thorp, Susan, 2015. "Cohort and target age effects on subjective survival probabilities: Implications for models of the retirement phase," Journal of Economic Dynamics and Control, Elsevier, vol. 55(C), pages 39-56.
    3. Suzanne B. Shu & Robert Zeithammer & John W. Payne, 2018. "The Pivotal Role of Fairness: Which Consumers Like Annuities?," NBER Working Papers 25067, National Bureau of Economic Research, Inc.
    4. Comerford, David A., 2019. "Asking for frequencies rather than percentages increases the validity of subjective probability measures: Evidence from subjective life expectancy," Economics Letters, Elsevier, vol. 180(C), pages 33-35.
    5. Lambregts, Timo R. & Schut, Frederik T., 2020. "Displaced, disliked and misunderstood: A systematic review of the reasons for low uptake of long-term care insurance and life annuities," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    6. David Blake & Marco Morales & Enrico Biffis & Yijia Lin & Andreas Milidonis, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 515-532, April.
    7. Milevsky, Moshe A., 2020. "Calibrating Gompertz in reverse: What is your longevity-risk-adjusted global age?," Insurance: Mathematics and Economics, Elsevier, vol. 92(C), pages 147-161.
    8. David Blake & Marco Morales & Jing Ai & Patrick L. Brockett & Linda L. Golden & Wei Zhu, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 319-343, April.
    9. David Blake & Marco Morales & Jing Ai & Patrick L. Brockett & Linda L. Golden & Wei Zhu, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 319-343, April.
    10. Rawley Z. Heimer & Kristian Ove R. Myrseth & Raphael S. Schoenle, 2019. "YOLO: Mortality Beliefs and Household Finance Puzzles," Journal of Finance, American Finance Association, vol. 74(6), pages 2957-2996, December.
    11. Hurwitz, Abigail & Sade, Orly & Winter, Eyal, 2020. "Unintended consequences of minimum annuity laws: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 208-222.
    12. Jain, Gaurav & Gaeth, Gary J. & Nayakankuppam, Dhananjay & Levin, Irwin P., 2020. "Revisiting attribute framing: The impact of number roundedness on framing," Organizational Behavior and Human Decision Processes, Elsevier, vol. 161(C), pages 109-119.
    13. David Blake & Marco Morales & Jing Ai & Patrick L. Brockett & Linda L. Golden & Wei Zhu, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 319-343, April.
    14. de Bresser, Jochem, 2016. "Test-Retest Reliability of Subjective Survival Expectations," Other publications TiSEM dfd6074d-31ae-4ecb-be25-6, Tilburg University, School of Economics and Management.
    15. Timothy Riffe & Pil H. Chung & Jeroen Spijker & John MacInnes, 2015. "Time-to-death patterns in markers of age and dependency," MPIDR Working Papers WP-2015-003, Max Planck Institute for Demographic Research, Rostock, Germany.
    16. Federica Teppa & Susan Thorp & Hazel Bateman, 2015. "Family, friends and framing: A cross-country study of subjective survival expectations," DNB Working Papers 491, Netherlands Central Bank, Research Department.
    17. David Blake & Marco Morales & Jing Ai & Patrick L. Brockett & Linda L. Golden & Wei Zhu, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 319-343, April.
    18. David Blake & Marco Morales & Jing Ai & Patrick L. Brockett & Linda L. Golden & Wei Zhu, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 319-343, April.
    19. Tim Riffe & Pil H. Chung & Jeroen Spijker & John MacInnes, 2016. "Time-to-death patterns in markers of age and dependency," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 14(1), pages 229-254.
    20. David Blake & Marco Morales & Jing Ai & Patrick L. Brockett & Linda L. Golden & Wei Zhu, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 319-343, April.
    21. David Blake & Marco Morales & Jing Ai & Patrick L. Brockett & Linda L. Golden & Wei Zhu, 2017. "Special Edition: Longevity 10 – The Tenth International Longevity Risk and Capital Markets Solutions Conference," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(S1), pages 319-343, April.
    22. L. Robin Keller & Yitong Wang, 2017. "Information Presentation in Decision and Risk Analysis: Answered, Partly Answered, and Unanswered Questions," Risk Analysis, John Wiley & Sons, vol. 37(6), pages 1132-1145, June.

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    More about this item

    Keywords

    Life Expectancy; Framing Effects; Judgment; Annuities; D03 – Behavioral Economics; D84 – Expectations;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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