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

Zvi Eckstein; Martin Eichenbaum; Dan Peled

doi:10.1016/0047-2727(85)90012-X

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

Zvi Eckstein, Martin Eichenbaum, Dan Peled

Research output: Contribution to journal › Article › peer-review

Abstract

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 language	English
Pages (from-to)	303-326
Number of pages	24
Journal	Journal of Public Economics
Volume	26
Issue number	3
DOIs	https://doi.org/10.1016/0047-2727(85)90012-X
State	Published - Apr 1985
Externally published	Yes

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

Access to Document

10.1016/0047-2727(85)90012-X

Cite this

@article{a57b36f81d2f43b7a57e66e4cc1104f3,

title = "Uncertain lifetimes and the welfare enhancing properties of annuity markets and social security",

abstract = "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.",

author = "Zvi Eckstein and Martin Eichenbaum and Dan Peled",

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.",

year = "1985",

month = apr,

doi = "10.1016/0047-2727(85)90012-X",

language = "English",

volume = "26",

pages = "303--326",

journal = "Journal of Public Economics",

issn = "0047-2727",

publisher = "Elsevier",

number = "3",

}

TY - JOUR

T1 - Uncertain lifetimes and the welfare enhancing properties of annuity markets and social security

AU - Eckstein, Zvi

AU - Eichenbaum, Martin

AU - Peled, Dan

N1 - 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.

PY - 1985/4

Y1 - 1985/4

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=0041082261&partnerID=8YFLogxK

U2 - 10.1016/0047-2727(85)90012-X

DO - 10.1016/0047-2727(85)90012-X

M3 - Article

AN - SCOPUS:0041082261

SN - 0047-2727

VL - 26

SP - 303

EP - 326

JO - Journal of Public Economics

JF - Journal of Public Economics

IS - 3

ER -

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

Abstract

Bibliographical note

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this