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Gender-based price discrimination in the annuity market: Evidence from Chile

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Listed:
  • Piera Bello

    (Istituto di economia politica (IDEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera)

Abstract

This paper studies gender-based price discrimination in the annuity market. The dataset consists of transaction-level data on the universe of individuals accessing the Chilean annuity market in the 2004-2017 period. It exploits the fact that, in Chile, individuals can access the annuity market through three different channels: an independent financial advisor, a sales agent at a company, or directly at a PFA (Pension Fund Administrator). The analysis shows that sales agents severely distort prices to the detriment of women customers. Women who consult sales agents pay higher transaction prices compared to the other two groups of women, while there is no variation in men’s prices across the three channels for market access. Additional evidence shows that this is not driven by differences in negotiation skills or type of annuity product purchased but rather by differences in initial prices. Firms charge higher initial prices to women who access the market through one of their sales agents. These results are consistent with an explanation that links the lack of competition between firms to discriminatory behaviour against female customers. Gender differences in financial literacy might explain why firms find it profitable to offer higher prices to women.

Suggested Citation

  • Piera Bello, 2020. "Gender-based price discrimination in the annuity market: Evidence from Chile," IdEP Economic Papers 2002, USI Università della Svizzera italiana.
  • Handle: RePEc:lug:wpidep:2002
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    References listed on IDEAS

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    More about this item

    Keywords

    annuity market; insurers; gender; bargaining; statistical inference;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G5 - Financial Economics - - Household Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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