How Do Financial and Longevity Literacy Affect Annuity Demand?

Autor/in	Brown, Jeffrey R.
Institution	National Bureau of Economic Research
Titel	How Do Financial and Longevity Literacy Affect Annuity Demand?
Quelle	Cambridge, Mass: National Bureau of Economic Research (2026) PDF als Volltext (1); PDF als Volltext (2) Link als defekt meldenVerfügbarkeit
Reihe	NBER working paper series. w35323
Beigaben	Illustrationen
Sprache	englisch
Dokumenttyp	online; Monografie; Graue Literatur
DOI	10.3386/w35323
Schlagwörter	Wissen; Bildungsniveau; Altersvorsorge; Sterblichkeit; Finanzen; Finanzplanung; Versicherung; Arbeitspapier
Abstract	Deciding whether to use an annuity to draw down accumulated retirement wealth is among the most complex financial decisions individuals face. It requires reasoning about longevity risk, stochastic income streams, and largely irreversible tradeoffs, often at older ages and with limited opportunities to learn from experience. This paper reviews theoretical, empirical, and experimental research to examine how financial literacy and longevity literacy shape annuitization decisions. While some extensions of the standard lifecycle model can rationalize low annuity demand, their explanatory power depends on individuals' ability to optimize over a set of complex risks and tradeoffs. Evidence shows that, although financial and longevity literacy are only weakly and inconsistently related to annuity take-up, they are strongly associated with retirement planning, the coherence of annuity valuations, and sensitivity to framing and choice architecture. These patterns suggest that literacy should be understood not as a direct determinant of annuity demand, but as a constraint on the extent to which observed annuitization behavior can be interpreted as revealing true preferences.
Erfasst von	ZBW - Leibniz-Informationszentrum Wirtschaft, Kiel
Update	2026/4