Optimal Gradual Annuitization: Quantifying the Costs of Switching to Annuities

We compute the optimal dynamic annuitization and asset allocation policy for a retiree with Epstein–Zin preferences, uncertain investment horizon, potential bequest motives, and pre‐existing pension income. In our setting the retiree can decide each year how much he consumes and how much he invests in stocks, bonds, and life annuities, while the prior literature mostly considered restricted so‐called deterministic or stochastic switching strategies. We show that postponing the annuity purchase is no longer optimal in the gradual annuitization (GA) case since investors are able to attain the optimal mix between liquid assets (stocks and bonds) and illiquid life annuities each year. In order to assess potential utility losses, we benchmark various restricted annuitization strategies against the unrestricted GA strategy.     

Doing it all: Women’s employment and reproductive work in Tajikistan

Central Asia has low labor force participation rates for women, despite high levels of poverty in the non-oil producing countries. Female labor force participation is related to competing uses for women’s time, especially in a context of poor infrastructure and limited availability of purchased replacements for household labor. We examine factors affecting women’s participation in employment and reproductive household work in Tajikistan, drawing on the 2003 Tajikistan Living Standards Survey. We incorporate specific conditions in Central Asia, including the prevalence of extended family households, norms about how women share household work, an absence of market substitutes for caring and reproductive labor, employment in family enterprises and poor infrastructure, especially in rural areas. We estimate the system using a Generalized Maximum Entropy (GME) approach. We find that few individual and household characteristics are related to time in employment. Time in noncare reproductive work decreases if a woman receives direct remuneration for her employment (compared to working in a family farm or enterprise but receiving no direct remuneration), but increases if the woman has less access to infrastructure. Rural women spend more time in both employment and non-care reproductive work than urban women, but less time in care work. Lack of infrastructure may leave women with few choices with respect to non-care reproductive work, while overall levels of time poverty create pressures on care time.     

Asset allocation and location over the life cycle with investment-linked survival-contingent payouts

This paper shows how survival-contingent investment-linked payouts can enhance investor wellbeing in the context of a portfolio choice model which integrates uninsurable labor income and asymmetric mortality expectations. In exchange for illiquidity, these products provide the consumer with access to mutual-fund style portfolio choice, as well as the survival credit generated from pooling mortality risk. Our model generates optimal asset location patterns indicating how much to hold in liquid versus illiquid survival-contingent payouts over the lifetime, and also asset allocation paths, showing how to invest in stocks versus bonds. We show that the investor who moves her money out of liquid saving into survival-contingent assets gradually from middle age to retirement and beyond, will enhance her welfare by as much as 50%. The results are robust to the introduction of uninsurable consumption shocks in housing expenses, income flows during the worklife and retirement, sudden changes in health status, and medical expenses.     

Gender differences in agricultural productivity: the case of Tanzania

The article examines gender differences in agricultural productivity using panel data for Tanzania. At the national level, there is weak evidence of mean differences in productivity between male and female plots, but conditional on manager characteristics, plot characteristics, inputs, and crop choice, plots managed solely by a woman are consistently found less productive than all other plots. An Oaxaca‐Blinder‐type decomposition reveals that important factors explaining the gender differential are plot area and family labor. Women are able to obtain higher yields on smaller plots farmed with less male labor and more female labor and thus cover the gender gap in productivity at the aggregate level, but there are still significant unobservable factors which contribute to widening the gap.     

Dynamic portfolio choice with deferred annuities

We derive the optimal life-cycle portfolio choice and consumption pattern for households facing uncertain labor income, risky capital market, and mortality risk. In addition to stocks and bonds, the households have access to deferred annuities. Deferred payout life annuities are financial contracts providing life-long income to the annuitant after a specified period of time conditional on survival. We find that deferred annuities play an important role in household portfolios and generate significant welfare gains. Households with high benefits from state pensions, moderate risk aversion and moderate labor income risk purchase deferred annuities from age 40 and gradually increase their portfolio share. At retirement, deferred annuities account for 78% of total financial wealth. Households with low state pensions and high labor income risk purchase more annuities and earlier. Uncertainty with respect to future mortality rates has the same effect, i.e. household hedge against longevity risks using deferred annuities.     

Integrating social media within an integrated marketing communication decision-making framework

The reported failure of organisations to successfully implement social media (SM) within marketing communications is likely to result in competitive disadvantage. An exploratory methodology was undertaken to understand implementation challenges of SM. The methodology drew on grounded theory with the in-depth interviews with senior marketers in the first phase of data collection guiding the second phase of data collection. The third phase involved 21 senior marketers completing an online questionnaire which obtained more generalised feedback on the model and identified differences in model application for different SM platforms. The contribution of the study is to propose a sequential decision-making framework for marketers that may help them overcome decision-making uncertainty regarding the choice and implementation of SM platforms.     

Fixed and variable longevity income annuities in defined contribution plans: Optimal retirement portfolios taking social security into account

This paper investigates retirees' optimal purchases of fixed and variable longevity income annuities using their defined contribution (DC) plan assets and given their expected social security benefits. As an alternative, we also evaluate using plan assets to boost social security benefits through delayed claiming. Using a calibrated life-cycle model, we determine that including deferred income annuities in DC accounts is welfare-enhancing for all sex/education groups examined. We also show that providing access to well-designed variable deferred annuities with some equity exposure further enhances retiree well-being, compared to having access only to fixed annuities. Nevertheless, for those facing the highest mortality rates, delaying claiming social security is mostly preferred, whereas those anticipating living longer than average will benefit more from using accumulated DC plan assets to purchase deferred annuities.