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Consumer preferences for annuity attributes: Beyond net present value

Publication ,  Journal Article
Shu, SB; Zeithammer, R; Payne, JW
Published in: Journal of Marketing Research
April 1, 2016

Decisions about life annuities are an important part of consumer decumulation of retirement assets, yet they are relatively underexplored by marketing researchers studying consumer financial decision making. In this article, the authors propose and estimate a model of individual preferences for life annuity attributes using a choice-based stated- preference survey. Annuities are presented in terms of consumer-relevant attributes such as monthly income, yearly adjustments, period certain guarantees, and company financial strength. The authors find that these attributes directly influence consumer preferences beyond their impact on the annuity's expected present value. The strength of the direct influence depends on how annuities are described: when annuities are represented only through basic attributes, consumers undervalue inflation protection, and preferences are not monotonically increasing in duration of period certain guarantees. When descriptions of annuities are enriched with cumulative payment information, consumers no longer undervalue inflation protection, but nonlinear preferences for period certain options remain. The authors find that among annuities with the same expected payout but different annual increases and period certain guarantees, the proportion of consumers who choose the annuity over self-management can vary by more than a factor of 2.

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Published In

Journal of Marketing Research

DOI

EISSN

1547-7193

ISSN

0022-2437

Publication Date

April 1, 2016

Volume

53

Issue

2

Start / End Page

240 / 262

Related Subject Headings

  • Marketing
  • 3506 Marketing
  • 1505 Marketing
 

Citation

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Shu, S. B., Zeithammer, R., & Payne, J. W. (2016). Consumer preferences for annuity attributes: Beyond net present value. Journal of Marketing Research, 53(2), 240–262. https://doi.org/10.1509/jmr.13.0004
Shu, S. B., R. Zeithammer, and J. W. Payne. “Consumer preferences for annuity attributes: Beyond net present value.” Journal of Marketing Research 53, no. 2 (April 1, 2016): 240–62. https://doi.org/10.1509/jmr.13.0004.
Shu SB, Zeithammer R, Payne JW. Consumer preferences for annuity attributes: Beyond net present value. Journal of Marketing Research. 2016 Apr 1;53(2):240–62.
Shu, S. B., et al. “Consumer preferences for annuity attributes: Beyond net present value.” Journal of Marketing Research, vol. 53, no. 2, Apr. 2016, pp. 240–62. Scopus, doi:10.1509/jmr.13.0004.
Shu SB, Zeithammer R, Payne JW. Consumer preferences for annuity attributes: Beyond net present value. Journal of Marketing Research. 2016 Apr 1;53(2):240–262.

Published In

Journal of Marketing Research

DOI

EISSN

1547-7193

ISSN

0022-2437

Publication Date

April 1, 2016

Volume

53

Issue

2

Start / End Page

240 / 262

Related Subject Headings

  • Marketing
  • 3506 Marketing
  • 1505 Marketing