@article{c9adb6226b6d4f598a7c20eb5abf54e8,
title = "Behavioral impediments to valuing annuities: Complexity and choice bracketing",
abstract = "—This paper examines two behavioral factors that diminish people{\textquoteright}s ability to value a lifetime income stream or annuity, drawing on a randomized experiment with about 4,000 adults in a U.S. nationally representative sample. We find that increasing the complexity of the annuity choice reduces respondents{\textquoteright} ability to value the annuity, measured by the difference between the sell and buy values they assign to the annuity. When we limit narrow choice bracketing by inducing people to think first about how quickly or slowly to spend down assets in retirement, their ability to value an annuity increases.",
author = "Brown, {Jeffrey R.} and Arie Kapteyn and Luttmer, {Erzo F.P.} and Mitchell, {Olivia S.} and Anya Samek",
note = "This paper was funded as a pilot project as part of a Roybal grant awarded to the University of Southern California, Roybal Center for Health Decision Making and Financial Independence in Old Age (5P30AG024962-12). We are also grateful for support provided by the Pension Research Council/Boettner Center at the Wharton School of the University of Pennsylvania. The project described in this paper relies on data from surveys administered by the Understanding America Study (UAS), which is maintained by the Center for Economic and Social Research (CESR) at the University of Southern California (USC). We thank Peter Choi and Andre Gray for excellent research assistance. We are grateful for helpful comments from Alan Gustman and multiple seminar audiences. J.B. is a trustee of TIAA, a provider of annuities and other financial products. O.M. is a trustee of the Wells Fargo Funds and has received research support from the TIAA Institute. The opinions and conclusions expressed here are solely our own and do not represent the opinions or policy of any institution with which we are affiliated or of USC, CESR or the UAS. {\textcopyright} Brown, Kapteyn, Luttmer, Mitchell, and Samek.",
year = "2021",
month = jul,
day = "12",
doi = "10.1162/rest_a_00892",
language = "English (US)",
volume = "103",
pages = "533--546",
journal = "Review of Economics and Statistics",
issn = "0034-6535",
publisher = "MIT Press Journals",
number = "3",
}