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Interest rates are low but are annuities expensive?
Author(s) -
Booth Philip,
Wood Geoffrey E.
Publication year - 2000
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/1468-0270.00238
Subject(s) - economics , inflation (cosmology) , interest rate , life annuity , annuity , illusion , actuarial science , monetary economics , finance , pension , physics , neuroscience , theoretical physics , biology
It is often claimed that annuities are now ‘expensive’. That claim is at least partly based on money illusion. Careful analysis shows that the current prices of annuities are largely the result of a decline in inflation expectations which has brought about a change in the income stream for annuities.