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Fair Retirement Under Risky Lifetime

Author

Listed:
  • FLEURBAEY, Marc
  • LEROUX, Marie-Louise
  • PESTIEAU, Pierre
  • PONTHIÈRE, Gregory

Abstract

A premature death unexpectedly brings a life and a career to their end, leading to substantial welfare losses. We study the retirement decision in an economy with risky lifetime, and compare the laissez-faire with egalitarian social optima. We consider two social objectives: (1) the maximin on expected lifetime welfare (ex ante), allowing for a compensation for unequal life expectancies; (2) the maximin on realized lifetime welfare (ex post), allowing for a compensation for unequal lifetimes. The latter optimum involves, in general, decreasing lifetime consumption profiles, as well as raising the retirement age, unlike the ex ante egalitarian optimum. This result is robust to the introduction of unequal life expectancies and unequal productivities. Hence, the postponement of the retirement age can, quite surprisingly, be defended on egalitarian grounds --although the conclusion is reversed when mortality strikes only after retirement.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • FLEURBAEY, Marc & LEROUX, Marie-Louise & PESTIEAU, Pierre & PONTHIÈRE, Gregory, 2016. "Fair Retirement Under Risky Lifetime," LIDAM Reprints CORE 2729, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2729
    Note: In : International Economic Review, 57(1) 2016, p. 117-210
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. #HEJC papers for October 2013
      by academichealtheconomists in The Academic Health Economists' Blog on 2013-10-01 04:30:26

    Citations

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    Cited by:

    1. Vandenberghe, Vincent, 2024. "Partial de-annuitization of public pensions vs. retirement age differentiation: Which is best to account for longevity differences?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 23(1), pages 111-131, January.
    2. Barigozzi, Francesca & Cremer, Helmuth & Lozachmeur, Jean-Marie, 2023. "Gender wage and longevity gaps and the design of retirement systems," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 263-287.
    3. Marie-Louise Leroux & Pierre Pestieau & Gregory Ponthiere, 2021. "Fair long-term care insurance," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(3), pages 503-533, October.
    4. Marie‐Louise Leroux & Pierre Pestieau & Gregory Ponthiere, 2024. "The optimal design of assisted reproductive technologies policies," Health Economics, John Wiley & Sons, Ltd., vol. 33(7), pages 1454-1479, July.
    5. Johanna Etner & Natacha Raffin & Thomas Seegmuller, 2020. "Reproductive health, fairness, and optimal policies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1213-1244, September.
    6. Baurin, Arno, 2021. "The limited power of socioeconomic status to predict lifespan: Implications for pension policy," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).
    7. Aronsson, Thomas & Blomquist, Sören, 2018. "Uncertain Length of Life, Retirement Age, and Optimal Pension Design," Umeå Economic Studies 957, Umeå University, Department of Economics.
    8. Kindermann, Fabian & Kunz, Sebastian, 2025. "Unequal Lifespans and Redistribution," VfS Annual Conference 2025 (Cologne): Revival of Industrial Policy 325366, Verein für Socialpolitik / German Economic Association.
    9. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2015. "Longévité différentielle et redistribution : enjeux théoriques et empiriques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 91(4), pages 465-497.
    10. Marc Fleurbaey & Marie‐Louise Leroux & Pierre Pestieau & Gregory Ponthiere & Stephane Zuber, 2022. "Premature deaths, accidental bequests, and fairness," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(3), pages 709-743, July.
    11. Gregory Ponthiere, 2025. "Social insurance against a short life: Ante-Mortem versus post-mortem policies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 65(1), pages 255-290, August.
    12. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 41-74, March.
    13. Grégory Ponthière, 2020. "Pensions and social justice. From standard retirement to reverse retirement," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(6), pages 193-226.
    14. Marie-Louise Leroux & Pierre Pestieau & Gregory Ponthiere, 2022. "Childlessness, childfreeness and compensation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(1), pages 1-35, July.
    15. Johanna Etner & Natacha Raffin & Thomas Seegmuller, 2018. "Male reproductive health, fairness and optimal policies," EconomiX Working Papers 2018-32, University of Paris Nanterre, EconomiX.
    16. Marie-Louise Leroux & Gregory Ponthiere, 2018. "Working time regulation, unequal lifetimes and fairness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(3), pages 437-464, October.
    17. Gregory Ponthiere, 2020. "A theory of reverse retirement," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1618-1659, September.
    18. Pierre Pestieau & Gregory Ponthiere, 2014. "Policy Implications of Changing Longevity," CESifo Economic Studies, CESifo Group, vol. 60(1), pages 178-212.
    19. Ponthiere, Gregory, 2024. "Higher Education Subsidies and the Universal Insurance against a Short Life," GLO Discussion Paper Series 1528, Global Labor Organization (GLO).
    20. Vandenberghe Vincent, 2021. "Differentiating retirement age to compensate for health differences," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-34, May.
    21. Pestieau, Pierre & Ponthiere, Gregory, 2016. "Longevity Variations And The Welfare State," Journal of Demographic Economics, Cambridge University Press, vol. 82(2), pages 207-239, June.
    22. Grégory Ponthière, 2017. "Pollution, décès prématuré et compensation," Revue économique, Presses de Sciences-Po, vol. 68(1), pages 97-118.
    23. Arno Baurin, 2020. "The Limited Power of Socioeconomic Status to Predict Longevity: Implications for Pension Policy," LIDAM Discussion Papers IRES 2020019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    24. Ponthiere, Gregory, 2024. "Stoicism and the Value of Life," GLO Discussion Paper Series 1545, Global Labor Organization (GLO).
    25. Torben M. Andersen & Marias H. Gestsson, 2022. "Is full annuitization socially optimal?," Journal of Economics, Springer, vol. 135(2), pages 199-217, March.

    More about this item

    JEL classification:

    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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