Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/193941 
Year of Publication: 
2018
Series/Report no.: 
ESRI Working Paper No. 604
Publisher: 
The Economic and Social Research Institute (ESRI), Dublin
Abstract: 
We hypothesise and confirm a substantial framing effect in relation to whether people opt for an annuity on retirement. Two laboratory experiments were conducted in collaboration with a national pensions regulator. Individuals demanded a higher annuity rate when pensions were initially conceived of as an accumulated lump sum - a "nest egg" or "pension pot" - than when they were initially conceived of as retirement income. The effect was recorded using both a matching and a choice procedure. Effect sizes implied more than a doubling of demand for annuities at market rates. While mindful of the need for caution in generalising from hypothetical laboratory studies, the findings have potentially strong policy implications. The framing of pension products in marketing materials and disclosures may have substantial effects on financial risks borne in later life.
Document Type: 
Working Paper

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