How Much Does Annuity Demand React to a Large Price Change?

Item Type Journal paper
Abstract In this paper, we present new evidence for the effect of changes in annuity prices on the decision to annuitize. We exploit an unprecedented change in policy in several Swiss occupational pension plans. There is an implied 8 percent reduction in the rate at which retirement capital is translated into an annuity, and this represents a net present value loss of CHF 18,500 (around US$ 20,000). To estimate the impact of this change, we use data from companies that changed their prices and from one large company that did not. We find that the price change reduces the propensity to annuitize among affected individuals by 16.8 percentage points.
Authors Bütler, Monika & Staubli, Stefan
Journal or Publication Title Scandinavian Journal of Economics
Language English
Keywords Annuity puzzle; occupational pension; policy change
Subjects economics
HSG Classification contribution to scientific community
Refereed No
Date July 2013
Publisher Wiley-Blackwell
Place of Publication Oxford
Volume 115
Number 3
Page Range 808-824
Number of Pages 17
ISSN 0347-0520
ISSN-Digital 1467-9442
Publisher DOI https://doi.org/10.1111/sjoe.12022
Depositing User Sabine Mueller
Date Deposited 09 Jul 2013 15:37
Last Modified 20 Jul 2022 17:17
URI: https://www.alexandria.unisg.ch/publications/224214

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Bütler, Monika & Staubli, Stefan (2013) How Much Does Annuity Demand React to a Large Price Change? Scandinavian Journal of Economics, 115 (3). 808-824. ISSN 0347-0520

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https://www.alexandria.unisg.ch/id/eprint/224214
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