The Cost of Annuities: Implications for Saving Behavior and Bequests

The fact that most eldealy individuals in the United States choose to maintain a flat age-wealth profile, rather than buy individual life annuities, stands in contrast to central implications of the standard life-cycle model of consumption-saving behavior. The analysis in this paper lends support to an explanation for this phenomenon based either on the cost of annuities, importantly including the element of that cost due to adverse selection, or on the interaction of that cost and an intentional bequest motive. Expected yields offered on individual life annuities in the United States are lower by some 4-6%, or 2 1/2-4 1/2% after allowing for adverse selection, than yields on alternative long-term fixed-income investments. Simulations of an extended model of life-cycle saving and portfolio behavior, allowing explicitly for uncertain lifetimes and Social Security, show that yield differentials in this range can account for the observed behavior, even in the absence of a bequest motive, during the early years of retirement. By contrast, at older ages the combination of yield differentials in this range and a positive bequest motive is necessary to do so.

Annuity Prices and Saving Behavior in the United States

The observed reluctance of most individuals in the United States to buy individual life annuities, and the concomitant approximately flat average age-wealth profile, stand in sharp contradiction to the standard life cycle model of consumption-saving behavior. The analysis in this paper lends support to an explanation for this phenomenon based on the interaction of an intentional bequest motive and annuity prices that are not actuarially fair. Premiums charged for individual life annuities in the United States include a load factor of 32-48c per dollar,or18-33c per dollar after allowing for adverse selection, in comparison to actuarially fair annuity values. Load factors of this size are not out of line with those on other familiar (and almost universally purchased) insurance products. Simulations of an extended model of life cycle saving and portfolio behavior, allowing explicitly for uncertain lifetimes and Social Security, show that the load factor charged would have to be far larger than this to account for the observed behavior in the absence of a bequest motive. By contrast, the combination of a load factor in this range and a positive bequest motive can do so for some plausible values of the assumed underlying parameters. Moreover,if this combination of factors is leading elderly individuals to avoid purchasing life annuities, it implies a typical bequest that is fairly large in comparison to their consumption.

Edward Snowden: Hero or Traitor? Considering the Implications for Canadian National Security and Whistleblower Law

Edward Snowden’s disclosures of secret National Security Agency documents have significant implications for Canadian national security law. Snowden’s revelation that the Communications Security Establishment Canada (CSEC) attempted to spy on the Brazilian government is analyzed to determine: first, whether economic intelligence gathering is a legal function of CSEC; and, second, whether CSEC employees would be afforded protection by the Security of Information Act (SOIA) if they decided to reveal the existence of such a program. Since whistleblower protection for intelligence agency personnel has never been tested in Canadian courts, the author draws on different areas of law to fill a void in Canadian legal literature and jurisprudence. In this respect, Snowden’s case allows observers to imagine how whistleblower protection might operate and, in doing so, provides a case study to determine whether SOIA’s provisions are overly restrictive or lenient. Ultimately, the author suggests that CSEC’s statutory framework permits the organization to spy on a foreign government for economic intelligence. Furthermore, whistleblower protection law would not protect Snowden because the manner in which he disclosed secret information does not comply with the framework set out in the SOIA

Thirring Solitons in the presence of dispersion

The effect of dispersion or diffraction on zero-velocity solitons is studied for the generalized massive Thirring model describing a nonlinear optical fiber with grating or parallel-coupled planar waveguides with misaligned axes. The Thirring solitons existing at zero dispersion/diffraction are shown numerically to be separated by a finite gap from three isolated soliton branches. Inside the gap, there is an infinity of multi-soliton branches. Thus, the Thirring solitons are structurally unstable. In another parameter region (far from the Thirring limit), solitons exist everywhere.Comment: 12 pages, Latex. To appear in Phys. Rev. Let

Differences in Assessment Center Performance as a Function of the Race and Sex of Ratees and the Race of Assessors

The purpose of this study was to investigate the possibility of any systematic differences in assessment center ratings as a function of the race and sex of the ratees or the race of the assessors. In effect, the overriding question was to determine if there were discrimination due to race or sex-related biases. The subjects were 256 employees of a large southeastern utility who participated in an assessment center as the initial step for selection into a two-year management development and training program. Participants spent one day in the center, which consisted of three simulations of typical management activities. The exercises were designed to measure the following nine skill dimensions identified by a job analysis as being critical for job success: (1) Leadership, (2) Perception, (3) Adaptability, (4) Decisiveness (refers to the number of decisions made), (5) Decision-making (refers to the quality of decisions), (6) Organization and Planning, (7) Sensitivity, (8) Written Communications, and (9) Oral Communications