John Beshears, James Choi, David Laibson, and Brigitte Madrian, and Stephen Zeldes
Despite the prediction of Yaari (1965) -- retirees should annuitize all of their wealth to insure against the possibility of outliving their savings -- the purchase of private annuities is rare. For example, the market for immediate annuities was only $11.8 billion in 2005 (National Association of Variable Annuities, 2006). Brown (2007) discusses the difficulties the “annuity puzzle” poses for economic theory.
Beshears, J, Choi, JJ, Laibson, DI, Madrian, BC, Zeldes, SP (forthcoming). “What Makes Annuitization More Appealing?” Journal of Public Economics. NIHMS494287