The Annuitization of Americans' Resources: A Cohort Analysis
This paper constructs a unique cohort data set to study the changes since 1960 in the share of Americans' resources that are annuitized. Understanding these changes is important because the larger this share, the more cohorts are likely to consume and the less they are likely to bequeath. Hence, the degree of annuitization affects national saving as well as the transmission of inequality over time. Our findings are striking. Although the annuitized share of resources of younger Americans declined slightly between 1960 and 1990, it increased dramatically for older Americans. It doubled for older men and quadrupled for older women. Since the elderly have much higher mortality probabilities than do the young, their degree of annuitization is much more important for aggregate bequests and saving. According to our estimates, aggregate U.S. bequests would now be 66 percent larger had the post-1960 increase in annuitization not occurred. In addition, U.S. national saving would likely be substantially larger than is currently the case.
|Date of creation:||Apr 1995|
|Date of revision:|
|Publication status:||published as Kotlikoff, Laurence J. (ed.) Essays on Saving, Bequests, Altruism, and Life-Cycle Planning. 2001.|
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- Alan J. Auerbach & Laurence J. Kotlikoff & David N. Weil, 1992.
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NBER Working Papers
4182, National Bureau of Economic Research, Inc.
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"Generational Accounts: A Meaningful Alternative to Deficit Accounting,"
in: Tax Policy and the Economy, Volume 5, pages 55-110
National Bureau of Economic Research, Inc.
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Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 27(1), pages 315-407.
- Jagadeesh Gokhale & Laurence J. Kotlikoff & John Sabelhaus, 1996. "Understanding the Postwar Decline in U.S. Saving: A Cohort Analysis," NBER Working Papers 5571, National Bureau of Economic Research, Inc.
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