December 11, 2016 | Leave a Comment
Prof. Schoenle presented his research “YOLO: Mortality Beliefs and Household Finance Puzzles” at the 2016 annual Academic Forum of the Defined Contribution Institutional Investment Association (DCIIA). The meeting took place November 29 and 30 at the Goldman Sachs Headquarters in New York City.
In his research, Prof. Schoenle studies how subjective mortality beliefs contribute to contradictory savings rate puzzles at opposite ends of the life-cycle. He shows that relative to a benchmark model using actuarial transition probabilities, the young under-save by 30%, and retirees draw down their assets 15% more slowly. Empirically, distorted mortality beliefs correlate with savings behavior, even controlling for risk preferences, and cognitive and socioeconomic factors. Salience of causes-of-death is a pivotal source of mortality belief distortions over the life-cycle.