A Behavioural Gap in Survival Beliefs
Type
working paper
Date Issued
2021-04-07
Author(s)
Abstract (De)
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.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Quantitative Economic Methods
Publisher place
St.Gallen
Official URL
Contact Email Address
enrico.degiorgi@unisg.ch
Eprints ID
263063
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Name
Subjective_Survival (36).pdf
Size
364.39 KB
Format
Adobe PDF
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