A Behavioural Gap in Survival Beliefs

Item Type Monograph (Working Paper)
Abstract Life span uncertainty (longevity risk) impacts several economic decisions. Individuals can form and revise their survival beliefs making use of behavioural heuristics. We propose a model of sentiment, in which individuals are assumed to switch between optimistic and pessimistic expectations on their health. When optimism is persistent in the face of health shocks, or when individuals are more likely to change their sentiment from pessimistic to optimistic than otherwise, our model predicts survival under-estimation at young ages and over-estimation at old ages. An empirical analysis based on the longitudinal data from the Health and Retirement Study (HRS) validates our model.
Authors Apicella, Giovanna & De Giorgi, Enrico Giovanni
Language English
Subjects economics
finance
HSG Classification contribution to scientific community
HSG Profile Area SEPS - Quantitative Economic Methods
Date 7 April 2021
Place of Publication St.Gallen
Official URL http://dx.doi.org/10.2139/ssrn.3821595
Contact Email Address enrico.degiorgi@unisg.ch
Depositing User Prof. Ph.D Enrico Giovanni De Giorgi
Date Deposited 22 Apr 2021 06:33
Last Modified 20 Jul 2022 17:45
URI: https://www.alexandria.unisg.ch/publications/263063

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Apicella, Giovanna & De Giorgi, Enrico Giovanni: A Behavioural Gap in Survival Beliefs. , 2021,

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https://www.alexandria.unisg.ch/id/eprint/263063
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