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This paper illustrates how a model of an insurance market with asymmetric information can be calibrated and solved to evaluate the economic consequences of government regulation. We estimate the impact of restricting gender-based pricing in the United Kingdom retirement annuity market, a market in which individuals are required to annuitize their retirement savings by selecting among a range of different annuity contracts. After calibrating a lifecycle utility model and estimating a model of annuitant mortality that allows for unobserved heterogeneity, we solve for the range of equilibrium contract structures with and without gender-based insurance pricing. Eliminating gender-based annuity pricing is generally thought to redistribute resources from men to women, since women have longer life expectancies. We find that endogenous adjustment of annuity contract menus in response to a ban on gender-based pricing can undo as much as half of the redistribution from men to women that would occur if gender-based pricing were banned and insurers were restricted to selling a single gender-blind policy. Our findings suggest that recognizing the endogenous structure of insurance contracts is important for analyzing the economic effects of insurance market regulation. They also illustrate the possibility of using theoretical models of insurance market equilibrium to develop both qualitative and quantitative policy insights.


Amy Finkelstein, James Poterba, and Casey Rothschild (2009). Redistribution by insurance market regulation: Analyzing a ban on gender-based retirement annuities. Journal of Financial Economics 91, 38-58. Definitive version available at

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