Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • August 2014
  • Article
  • Journal of Public Economics

What Makes Annuitization More Appealing?

By: John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian and Stephen P. Zeldes
  • Format:Print
ShareBar

Abstract

We conduct and analyze two large surveys of hypothetical annuitization choices. We find that allowing individuals to annuitize a fraction of their wealth increases annuitization relative to a situation where annuitization is an "all or nothing" decision. Very few respondents choose declining real payout streams over flat or increasing real payout streams of equivalent expected present value. Highlighting the effects of inflation increases demand for cost of living adjustments. Frames that highlight flexibility, control, and investment significantly reduce annuitization. A majority of respondents prefer to receive an extra "bonus" payment during one month of the year that is funded by slightly lower payments in the remaining months. Concerns about later-life income, spending flexibility, and counterparty risk are the most important self-reported motives that influence the annuitization decision.

Keywords

Annuity; Pension; Retirement Income; Framing; Annuities; Retirement

Citation

Beshears, John, James J. Choi, David Laibson, Brigitte C. Madrian, and Stephen P. Zeldes. "What Makes Annuitization More Appealing?" Special Issue on NBER Pensions. Journal of Public Economics 116 (August 2014): 2–16.
  • Find it at Harvard
  • Read Now

About The Author

John Beshears

Negotiation, Organizations & Markets
→More Publications

More from the Authors

    • November 2020
    • Faculty Research

    Social Salary Setting at Spiber

    By: Ashley Whillans and John Beshears
    • Organizational Behavior and Human Decision Processes

    Nudging: Progress to Date and Future Directions

    By: John Beshears and Harry Kosowsky
    • August 2020
    • Health Services Research

    Do Physician Incentives Increase Patient Medication Adherence?

    By: Edward Kong, John Beshears, David Laibson, Brigitte Madrian, Kevin Volpp, George Loewenstein, Jonathan Kolstad and James J. Choi
More from the Authors
  • Social Salary Setting at Spiber By: Ashley Whillans and John Beshears
  • Nudging: Progress to Date and Future Directions By: John Beshears and Harry Kosowsky
  • Do Physician Incentives Increase Patient Medication Adherence? By: Edward Kong, John Beshears, David Laibson, Brigitte Madrian, Kevin Volpp, George Loewenstein, Jonathan Kolstad and James J. Choi
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College