There are two stylised facts, namely weak demand for life-annuities and flat age-wealth profile, that contradict the life-cycle hypothesis. In this paper we design a theoretical framework, which combines plausible arguments, which have been put forward in the literature to reconcile theory with empirical evidence. Besides the existence of an annuity market and of a public pension system we assume risk-averse individuals who are uncertain about lifetime and disposable income and who have preferences for leaving bequests. It is shown that this framework can contribute to explain the observed portfolio decision in favour of financial assets relatively to annuities.
| Original language | English |
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| Publication status | Published - Dec 2004 |
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| Name | Working Papers of the Department of Economics at JKU Linz |
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| No. | 0414 |
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- 405002 Agricultural economics
- 502 Economics
- 502001 Labour market policy
- 502002 Labour economics
- 502003 Foreign trade
- 502009 Corporate finance
- 502010 Public finance
- 502012 Industrial management
- 502013 Industrial economics
- 502018 Macroeconomics
- 502020 Market research
- 502021 Microeconomics
- 502025 Econometrics
- 502027 Political economy
- 502039 Structural policy
- 502042 Environmental economics
- 502046 Economic policy
- 502047 Economic theory
- 504014 Gender studies
- 506004 European integration
- 507016 Regional economy
- 303010 Health economics
