Is Retiree Demand for Life Annuities Rational? Evidence from Public Employees

John Chalmers, Jonathan Reuter

NBER Retirement Research Center Paper No. NB 09-15
Issued in September 2009

---- Acknowledgements -----

We thank Pierluigi Balduzzi, Daniel Bergstresser, Jeffrey Brown, John Campbell, David Chapman, Cliff Holderness, Edie Hotchkiss, Alan Marcus, Robin McKnight, Phil Strahan, and Eric Zitzewitz for helpful discussions related to this research, and we thank Benjamin Goodman for explaining to us how TIAA-CREF priced its life annuities over our sample period. Finally, we thank employees from the Oregon Public Employees Retirement System who provided invaluable assistance by compiling and helping us interpret their data, and by answering our numerous questions about Oregon's pension system. Since PERS was subject to major legislative changes in late 2003, our description of the system only applies to the period for which we possess data. This research was supported by the U.S. Social Security Administration through grant #10-M-98363-1-01 to the National Bureau of Economic Research as part of the SSA Retirement Research Consortium. The findings and conclusions expressed are solely those of the authors and do not represent the views of SSA, any agency of the Federal Government, or the NBER.

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