Life Expectation Judgments, Fairness, and Loss Aversion in the Psychology of Social Security Claiming Decisions

Suzanne B. Shu, John W. Payne

NBER Retirement Research Center Paper No. NB 13-05
Issued in November 2013

This research seeks to better understand the psychological processes underlying Social Security claiming decisions. Specifically, we argue that the decision of when to claim Social Security benefits is affected by individuals’ subjective judgments of life expectation as well as psychological value constructs such as loss aversion and fairness. In a series of three online surveys of individuals aged 35-65, we find that individual differences in life expectation judgments, levels of sensitivity to losses, and perceived fairness and/or perceived ownership of SSA benefits jointly lead to predictable differences in individuals’ predictions of their own early or late claiming of benefits. We also test several manipulations of information presentation to determine their effects on early versus late claiming.

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