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| Author: | Walliser, J. |
| Title: | Adverse selection in the annuities market and the impact of privatizing social security |
| Journal: | Scandinavian Journal of Economics
2000 : VOL. 102:3, p. 373-394 |
| Index terms: | ADVERSE SELECTION SOCIAL SECURITY USA |
| Language: | eng |
| Abstract: | The observation that few Americans purchase life annuities has often been attributed to adverse selection. A still unanswered question is whether observable price increases caused by adverse selection can be generated endogenously in a life cycle model. This paper calibrates a pure life cycle model for a characteristic US cohort and reproduces three stylized facts. Adverse selection increases annuity prices by 7-10 percent; the cost of adverse selection rises with the age of the annuitant; and the cost is smaller for females than for males. |
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