Testing Methods to Enhance Longevity Awareness

Abstract

Many people have only a vague notion of the concept of life expectancy and the longevity risk they face at older ages, which in turn implies that they are likely to undersave for retirement. This paper employs an online experiment to investigate alternative ways to describe both life expectancy and longevity risk, with the goal of assessing whether these can raise peoples' awareness of possible retirement shortfalls. We also evaluate whether providing this information promotes interest in saving activity and demand for longevity insurance products. We find that providing longevity risk information impacts respondents' subjective survival probabilities, while simply describing average life expectancy does not. Yet providing life expectancy or longevity information significantly affects financial decisions, mostly regarding annuitization. Interestingly, we also find that merely prompting people to think about financial decisions changes their perceptions regarding subjective survival probabilities.

Racial and Ethnic Differences in Longevity Perceptions and Implications for Financial Decision Making

“…Specifically, this other set of participants received the following additional information regarding longevity risk: 10 The use of vignettes has a long history in the medical field, and they have grown increasingly popular in economics applications (Brown et al 2021;Samek, Kapteyn, and Gray 2019). Our previous work (Hurwitz et al 2022) used similar vignettes but did not analyze results by race/ethnicity as we do here. 11 The information provided is consistent with the population life tables used.…”

Longevity Perceptions and Saving Decisions during the COVID-19 Outbreak: An Experimental Investigation

“…We developed, fielded, and analyzed a nationally representative survey of Americans using the Prolific survey platform age 35-83, for whom we gathered a variety of demographic data, and to whom we posed hypothetical questions regarding saving behavior and demand for longevity insurance products. Specifically, building on Brown et al ( 2019), Samek et al (2019), andHurwitz et al (2020), we created two vignettes. 1 About half of our participants (2,542) was randomly selected to advise a hypothetical single man (woman) age 60 with no children regarding how to withdraw his (her) retirement savings.…”

Guessing, math, or something else? Lay people's processes for valuing annuities

“…In the instruction text for the annuity valuation, a random 50% of the sample was provided with a number higher than actual life expectancy through adding (similar as in Hurwitz, Mitchell, & Sade, 2022) the following sentence to the generic text all participants in Study 1 saw: "Note, 25 percent of the U.S. population live up to age 90 (that is another 25 years after age 65)." The numbers used were based on estimates of the distribution of number of years to live after age 65 (average of male and female) using U.S. mortality data (Milevsky, 2020).…”