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Demand For Life Annuities From Married Couples With A Bequest Motive

  • CARLOS VIDAL-MELIA

    (University of Valencia Spain)

  • ANA LEJÁRRAGA-GARCÍA

    (University of Valencia Spain)

This paper will try to explain the “annuities puzzle” in greater depth by introducing the bequest motive, both strategic and altruistic. It will try to determine whether this motive really is a relevant feature influencing the demand for lifetime annuities by married couples. With this aim in mind, we develop an optimization model of the utility provided by purchasing a lifetime annuity with contingent survivor benefit or a joint survivor life annuity. This will enable us to calculate equivalent wealth in various contexts: the possibility of access to actuarially fair annuity markets, the inclusion of so-called market imperfections, and the assumption that couples already have part of their wealth in pre-existing lifetime annuities. Results are presented for a model specification calibrated to Spain.

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File URL: http://128.118.178.162/eps/pe/papers/0409/0409009.pdf
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Paper provided by EconWPA in its series Public Economics with number 0409009.

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Length: 22 pages
Date of creation: 13 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwppe:0409009
Note: Type of Document - pdf; pages: 22
Contact details of provider: Web page: http://128.118.178.162

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