The distribution of wealth and welfare in the presence of incomplete annuity markets

Zvi Eckstein, Martin S. Eichenbaum, Dan Peled

Research output: Contribution to journalArticlepeer-review


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.

Original languageEnglish
Pages (from-to)789-806
Number of pages18
JournalQuarterly Journal of Economics
Issue number3
StatePublished - Aug 1985
Externally publishedYes

Bibliographical note

Funding 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


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