Department

Economics

Document Type

Article

Publication Date

1-2009

Abstract

We study adverse selection using data from an 1808 Act of British Parliament that effectively opened a market for life annuities. Our analysis indicates significant selection effects. The evidence for ad- verse selection is strongest for a sub-sample of annuitants whose an- nuities were purchased by profit-seeking speculators, a sub-sample in which “advantageous selection” resulting from multi-dimensional het- erogeneity is unlikely to have been significant. These results support the view that adverse selection can be masked by advantageous se- lection in empirical studies of standard insurance markets. JEL N23 D82.

Citation

Casey Rothschild (2009). Adverse selection in annuity markets: Evidence from the British Life Annuity Act of 1808. Journal of Public Economics 93, 776-784.

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Economics Commons

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