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13:00 - 14:00 20 June 2013

Testing for Private Information in the Market for Annuities


Ricrado Lecture Theatre | Drayton House (link Map)
30 Gordon Street | London | WC1H 0AN | United Kingdom

Open to: Academic | Student
Ticketing: Open

Speaker information

Gemma Tetlow, UCL & IFS

In this paper we test whether there is evidence of informational asymmetries – in particular, adverse selection – in the market for retirement annuities in the UK and what form this private information takes. Similar to previous papers, we find evidence of a positive correlation between purchasing an annuity product and subsequent survival, after controlling for the set of characteristics used by underwriters in this market. We add to the existing literature by presenting a variety of tests for adverse selection that are not confounded by advantageous selection. Our results suggest that there is significant evidence of adverse selection and that this cannot completely be mitigated even by controlling for a wide range of additional objective measures of individuals’ health that insurers do not currently use.


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