Pension Research Council: The Boettner Center: Working Paper Library: 2005 Series

Working Paper Library: 2005 Series

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Sex Mortality Differentials in the United States: The Role of Cohort Smoking Patterns
Samuel H. Preston and Haidong Wang
BWP2005-01
This paper demonstrates that, over the period 1948-2003, sex differentials in mortality in the age range 50-54 to 85+ widened and then narrowed on a cohort rather than on a period basis. The cohort with the maximum excess of male mortality was born shortly after the turn of the century. Three independent sources suggest that the turnaround in sex mortality differentials is consistent with sex differences in cigarette smoking by cohort. An age/period/cohort model reveals a highly significant effect of smoking histories on men's and women's mortality. This model suggests that improvements in mortality at older ages are likely to accelerate in the future.

Regret, Portfolio Choice, and Guarantees in Defined Contribution Schemes
Alexander Muermann, Olivia S. Mitchell, and Jacqueline M. Volkman
BWP2005-02
We model how asset allocation decisions in a defined contribution (DC) pension plan might vary with participants' attitudes about risk and regret. We show that anticipated disutility from regret can have a potent effect on investment choices. Compared to a risk-averse investor, the investor who takes regret into account will hold more stock when the equity premium is low but less stock when the equity premium is high. We also assess how regret can influence a DC plan participant's view of rate-of-return guarantees, as measured by his willingness-to-pay. We find that regret increases the regret-averse investor's willingness to pay for a guarantee when the portfolio is relatively risky but decreases it when the portfolio is relatively safe.

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