This paper examines the implications of the absence of complete annuity markets on the distribution of wealth and welfare of agents whose saving decisions are obtained under uncertainty regarding the length of their life. The absence of annuities is shown to yield a unique nondegenerate intragenerational distribution of wealth, which is fully characterized. This characterization is then used to evaluate the Pareto desirability of an annuity system. Alternative welfare criteria that can be used when the proposed change has differential impacts on the initial state of subsequent generations are considered.
|Number of pages||18|
|Journal||Quarterly Journal of Economics|
|State||Published - Aug 1985|
Bibliographical noteFunding Information:
*A previous version of this paper was presented at the 1982 Summer Meetings of the Econometric Society, Ithaca, New York. We appreciate helpful comments and suggestions from our colleagues, Andrew Abel, Jonathan Eaton, Lars Hansen, Robert Kaplan, Laurence Kotlikoff, Chester Spatt, Robert Townsend, and Allan Zelenitz, and the financial support of the National Science Foundation under grant SES-8308575.
ASJC Scopus subject areas
- Economics and Econometrics