The objective of this study is to examine individuals’ subjective health evaluation and the association with annuity participation. An annuity purchase, and its resulting liquidity constraints, have been offered by the literature as a reason for the observed low annuity adoption rate (Koijen et al., 2016; Zhao, 2015). In the event of a health shock, individuals may face high liquidity needs during a reduced longevity period. Thusly, subjective health status may serve as a form of intertemporal risk calibration when considering the discount factor at which the present value of an annuity benefit is estimated. The authors posit that individuals who subjectively evaluate their health status as better than average are more likely to own an annuity compared to those who subjectively evaluate their health status as lower than average.

Accepted Oral Presentation