Uncertain lifetimes and the welfare enhancing properties of annuity markets and social security

Zvi Eckstein, Martin Eichenbaum, Dan Peled

Research output: Contribution to journalArticlepeer-review


This paper explores the implications of social security programs and annuity markets through which agents, who are characterized by different distributions of length of lifetime, share death-related risks. When annuity markets operate, a non-discriminatory social security program affects only the intragenerational allocation of resources. In the absence of private information regarding individual survival probabilities, such a program will lead to a non-optimal intragenerational allocation of resources. However, the presence of adverse selection considerations gives rise to a Pareto improving role for a mandatory non-discriminatory social security program.

Original languageEnglish
Pages (from-to)303-326
Number of pages24
JournalJournal of Public Economics
Issue number3
StatePublished - Apr 1985
Externally publishedYes

Bibliographical note

Funding Information:
*We appreciate helpful conversations and suggestions from our colleagues Jon Eaton, Lars Hansen, Robert Kaplan, Larry Kotlikoff, Chester Spatt, Robert Townsend and Allen Zelentiz. Financial support by NSF grant no. SES-8308575 is gratefully acknowledged.

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Uncertain lifetimes and the welfare enhancing properties of annuity markets and social security'. Together they form a unique fingerprint.

Cite this