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Publications | Abigail Hurwitz Ph.d

Publications

In Press
Abigail Hurwitz, Lahav, Eyal , and Mugerman, Yevgeny . In Press. &Ldquo;Financial Less Is More&Rdquo;: An Experimental Study Of Financial Communication. Journal Of Behavioral And Experimental Economics. Abstract
Past research has demonstrated that many individuals are not well equipped to make financial decisions and hence depend greatly on the flow and quality of financial information. Various governments are implementing reforms aimed at improving the quality of pension financial communication. Certain countries are requiring a move to short-form pension reporting, and some are requiring digital reporting instead of (or in some cases, in addition to) paper reporting. In a series of experiments, we show that the ability to locate information in financial reports is sensitive to the length of the report and to the communication form.
2021
We experimentally study individuals' perceptions about and advice to others regarding retirement savings and annuitization during the pandemic. Many people recommend that others save more for retirement, but those most affected by the pandemic tell others to save and annuitize less. We investigate two possible channels for this result and show that the pandemic does not substantially alter optimism regarding survival probabilities. Hence, we conclude that economic factors are driving our results. Consequently, some financial ramifications of the COVID-19 outbreak are yet to be revealed, as the pandemic is having longer-term effects on people's willingness to save and annuitize.
Abigail Hurwitz and Sade, Orly . 2021. Smokers&Rsquo; Life Expectancy And Annuitization Decisions. In Behavioral Finance: A Novel Approach, Pp. 349–364. World Scientific. Abstract
We examine subjective life expectancy perceptions of Israeli smokers by investigating the results of an online survey of a representative sample of 963 Israeli residents aged 50–70 years. Our results suggest that smokers are overoptimistic regarding their subjective life expectancy, a fact that is expected to influence the decision-making process in general, and financial decisions in particular. Indeed, our results are consistent with the results obtained by Hurwitz and Sade (2019) with regard to annuitization decisions.
2020
Abigail Hurwitz and Sade, Orly . 12/2020. An Investigation Of Time Preferences, Life Expectancy, And Annuity Versus Lump Sum Choices: Can Smoking Harm Long-Term Saving Decisions?. Journal Of Economic Behavior & Organization, 180, Pp. 812-825. Abstract
We exploit the fact that Israeli pension insurance policies do not take health conditions or smoking status into account in annuity pricing to investigate the potential effect of being a smoker on retirement payout choices. Contrary to the idea that smokers have higher discount rates (and thus should prefer the lump sum option), and even though the insurance pricing mechanism means that smokers would be offered the same annuity as nonsmokers (all else equal), we find that smokers do not prefer the lump sum option. We offer and test several potential explanations for our findings: illusions regarding life expectancy, self-control, and advantageous selection.
Abigail Hurwitz, Sade, Orly , and Winter, Eyal . 1/2020. Unintended Consequences Of Minimum Annuity Laws: An Experimental Study. Journal Of Economic Behavior & Organization, 169, Pp. 208–222. Abstract
The need to ensure that people have adequate savings for retirement has prompted debate among regulators and academics. Certain countries have implemented or are considering implementing mandatory minimum annuity laws (e.g., Singapore and Israel), whereas others have repealed or are considering repealing such legislation (e.g., the U.K.). We investigate the introduction as well as the repeal of a regulatory change—specifically, a mandatory minimum annuity rule—using a laboratory experiment and two surveys. Our results indicate that imposing a mandatory minimum may create an anchoring effect to the threshold level. Furthermore, our results suggest that the mandatory requirement may have unintended consequences: Such laws may fail to provide an increase in the demand for annuities and may even reduce it for certain individuals. The outcome is sensitive to the relation between the level of the mandatory minimum and anticipated consumption (i.e., future financial need). Moreover, we provide novel evidence about the consequences of a repeal of mandatory minimum annuity laws and suggest that it may not restore the demand for annuities to the pre-law level.