Betting on a long life: The role of subjective life expectancy in the demand for private pension insurance of german households
With a view to investigating the presence of adverse selection, we analyze determinants of private pension insurance uptake of German households in a probit model. Using survey data on savings and old-age provision, we find that subjective life expectancy is positively related with the probability of having supplementary private pension insurance. This indicates that the German annuities market is in fact characterized by adverse selection. Furthermore, pre-existing annuities from the public pension system tend to be a substitute to private insurance, while financial literacy enhances the uptake. We also find evidence for a bequest motive in old-age provision, but see no indication for pooling longevity risk within couples.
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- Börsch-Supan, Axel & Reil-Held, Anette & Schunk, Daniel, 2008. "Saving incentives, old-age provision and displacement effects: evidence from the recent German pension reform," Journal of Pension Economics and Finance, Cambridge University Press, vol. 7(03), pages 295-319, November.
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CFS Working Paper Series
2007/27, Center for Financial Studies (CFS).
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- Maarten vanRooij & Annamaria Lusardi & Rob Alessie, 2007. "Financial Literacy and Stock Market Participation," Working Papers wp162, University of Michigan, Michigan Retirement Research Center.
- Maarten van Rooij & Annamaria Lusardi & Rob Alessie, 2007. "Financial Literacy and Stock Market Participation," NBER Working Papers 13565, National Bureau of Economic Research, Inc.
- Maarten van Rooij & Annamaria Lusardi & Rob Alessi, 2007. "Financial literacy and stock market participation," DNB Working Papers 146, Netherlands Central Bank, Research Department.
- Hans-Martin von Gaudecker & Carsten Weber, 2004. "Surprises in a Growing Market Niche: An Evaluation of the German Private Life Annuities Market," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(3), pages 394-416, July.
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