Health shocks, risk preferences and annuity choices

Published: 22 February 2024

Author: Johannes Hagen, And Michal Hodor, And Abigail Hurwitz, And

This study examines the simultaneous impact of risk type and risk preferences on annuity demand. Through a quasi-experimental design that leverages individuals’ reactions to their first malignant cancer diagnosis around retirement, we show that a 30% reduction in the present value of life annuities from decreased life expectancy results in just a 5% decline in annuitization rates. We further demonstrate that risk-averse individuals drive this effect, whereas the risk-tolerant remain unchanged in their demand. Our findings suggest that risk-averse individuals view life annuities as a means to ensure against longevity risk.


IFAU-Working paper 2024:4 "Health shocks, risk preferences and annuity choices" is written by Johannes Hagen at Jönköping University and IFAU, Michal Hodor at Tel Aviv University and Abigail Hurwitz at The Hebrew University of Jerusalem. For more information contact Johannes Hagen, e-mail:, Michal Hodor, or Abigail Hurwitz, e-mail: