SAFE Working Paper No. 375

Testing Methods to Enhance Longevity Awareness

Many people do not understand the concepts of life expectancy and longevity risk, potentially

leading them to under-save for retirement or to not purchase longevity insurance, which in turn

could reduce wellbeing at older ages. We investigate alternative ways to increase the salience of

both concepts, allowing us to assess whether these change peoples’ perceptions and financial

decision making. Using randomly-assigned vignettes providing subjects with information about

either life expectancy or longevity, we show that merely prompting people to think about financial

decisions changes their perceptions regarding subjective survival probabilities. Moreover, this

information also boosts respondents’ interest in saving and demand for longevity insurance. In

particular, longevity information influences both subjective survival probabilities and financial

decisions, while life expectancy information influences only annuity choices. We provide some

evidence that many people are simply unaware of longevity risk.