Title: The Bequest Motive And Single People’S Demand For Life Annuities
Abstract: The main objective of this paper is to go deeper into the “annuity puzzle” by introducing the altruistic and strategic bequest motive and determining whether this really is a relevant factor affecting the theoretical decision to purchase life annuities. With this end in view we develop an optimization model based on that first put forward by Lejarraga et al. [2002], then add to it elements from other models such as Friedman and Warshawsky’s [1990] and Jousten’s [1998 & 2001] which include the bequest motive. We also analyse welfare by calculating the equivalent wealth in different contexts: the possibility of having access to an actuarially fair life annuity or programmed withdrawal market, the incorporation of so-called market imperfections, and the inclusion of the hypothesis that the individuals already have part of their wealth in pre-existing life annuities.
Publication Year: 2004
Publication Date: 2004-01-01
Language: en
Type: article
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Cited By Count: 12
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