Speakers
Time
Start:
End:
Address
Room 464, UNSW Business School, UNSW
Description
November 26, 2019: Hazel Bateman & Inka Eberhardt
Speaker #1: Hazel Bateman
Topic: Learning To Value Annuities: The Role Of Information And Engagement
Abstract:
Using an online experimental survey we investigate perception (in terms of understanding, riskiness and control) and valuation (elicited using iterative multiple price lists) of lifetime annuities relative to flexible drawdown products. We find that for those participants who are engaged with the experimental tasks, information provision can substantially reduce or eliminate behavioural drivers of the complex task of valuation of annuities. Providing balanced information and multiple opportunities to learn about the key features of the products, including impact of potential outcomes using an online tool, narrows the gap between the willingness to pay and willingness to accept, and, offsets the effects of low financial capability, information framing and real world institutional settings.
About the speaker:
Professor Hazel Bateman is one of Australia’s leading experts in superannuation and pension economics and finance. From 2014-2017, she was Head of School of Risk and Actuarial Studies at the UNSW Business School. Since 2017 she has been a co-Deputy Director of the ARC Centre of Excellence in Population Ageing Research (CEPAR). Hazel Bateman has research interests in the areas of public and private provision for retirement. In particular, her work focuses on the means to facilitate better financial decisions in retirement accumulation and decumulation including: choice architecture, information architecture, financial literacy and financial advice; and the taxation and regulation of superannuation funds. Professor Bateman is the author of over 70 peer-reviewed publications and book chapters and the book Forced Saving. She has been a Chief Investigator on over a dozen Australian Research Council (ARC) funded projects, and is joint editor of the Journal of Pension Economics and Finance. Hazel Bateman has been a consultant on retirement income issues to a range of Australian and international organisations including the OECD, the World Bank, the Social Insurance Administration (China), APEC and the Korean Institute of Health and Social Affairs.
Speaker #2: Inka Eberhardt
Topic: Follow The Rating: How Disclosure Affects Retirement Income Product Choices In A Discrete Choice Experiment
Abstract:
Consumers in most Defined Contribution superannuation and pension plans have considerable flexibility as to how they decumulate their assets. However, this flexibility may undermine their well-being as they tend to annuitize less of their savings that is considered appropriate. In Australia, the setting for this study, the government has proposed a one-page, simplified and standardized Fact Sheet for retirement income products, with the aim of enhancing retiree decision making. We conducted an online discrete choice experiment with 902 participants aged between 55 and 67 years to test the effect of the information items prescribed for the proposed Fact Sheet. We tested three versions of the Fact Sheet, varying the amount of text, and inclusion of graphs and tables in a between-subjects design. Participants are asked to make 12 pair-wise choices between four different retirement income products. We find that consumers were likely to choose the Annuity/Account-Based Pension (ABP) hybrid and the Annuity 34% and 33% of the time respectively. Contrary to the actual behaviour of Australian retirees (who predominantly choose ABPs), the ABP was least preferred (14%). We find that the government-proposed product rating and the income level are the most important prescribed information items that drive decisions to choose retirement income products, while items such as Access to Capital and Death Benefits play a minor role. Compared to the text-only treatment, the Annuity and the Annuity/APB hybrid are more likely to be chosen in the versions with graphs and tables, in which the product rating is more salient. Our findings suggest that the Fact Sheet design, especially the derivation of the prescribed product rating, drive decision-making, so must be carefully designed.
About the speaker:
Inka Eberhardt is a research fellow at ARC Centre of Excellence in Population Ageing Research (University of New South Wales, Australia). Through field experiments, lab-in-the-field experiments and survey research, Inka examines the underlying mechanisms of people’s financial decision-making. Inka is involved in a 5-year project with the Dutch pension fund of the retail sector, Bedrijfstakpensioenfonds voor de Detailhandel, which investigates effective pension communication and retirement savings behavior. Together with Michael Sanders and Janna Ter Meer from the Behavioural Insights Team (London, UK) and Paul Smeets, Inka is working on a meta-analysis on social norms. Furthermore, Inka is working on a project researching financial giving behavior in a game show setting. Finally, Inka is working with Hazel Bateman to analyze the impact of product disclosure on retirement income product choice.
Additional information regarding this event will be updated here as it becomes available.
Speaker #1: Hazel Bateman
Topic: Learning To Value Annuities: The Role Of Information And Engagement
Abstract:
Using an online experimental survey we investigate perception (in terms of understanding, riskiness and control) and valuation (elicited using iterative multiple price lists) of lifetime annuities relative to flexible drawdown products. We find that for those participants who are engaged with the experimental tasks, information provision can substantially reduce or eliminate behavioural drivers of the complex task of valuation of annuities. Providing balanced information and multiple opportunities to learn about the key features of the products, including impact of potential outcomes using an online tool, narrows the gap between the willingness to pay and willingness to accept, and, offsets the effects of low financial capability, information framing and real world institutional settings.
About the speaker:
Professor Hazel Bateman is one of Australia’s leading experts in superannuation and pension economics and finance. From 2014-2017, she was Head of School of Risk and Actuarial Studies at the UNSW Business School. Since 2017 she has been a co-Deputy Director of the ARC Centre of Excellence in Population Ageing Research (CEPAR). Hazel Bateman has research interests in the areas of public and private provision for retirement. In particular, her work focuses on the means to facilitate better financial decisions in retirement accumulation and decumulation including: choice architecture, information architecture, financial literacy and financial advice; and the taxation and regulation of superannuation funds. Professor Bateman is the author of over 70 peer-reviewed publications and book chapters and the book Forced Saving. She has been a Chief Investigator on over a dozen Australian Research Council (ARC) funded projects, and is joint editor of the Journal of Pension Economics and Finance. Hazel Bateman has been a consultant on retirement income issues to a range of Australian and international organisations including the OECD, the World Bank, the Social Insurance Administration (China), APEC and the Korean Institute of Health and Social Affairs.
Speaker #2: Inka Eberhardt
Topic: Follow The Rating: How Disclosure Affects Retirement Income Product Choices In A Discrete Choice Experiment
Abstract:
Consumers in most Defined Contribution superannuation and pension plans have considerable flexibility as to how they decumulate their assets. However, this flexibility may undermine their well-being as they tend to annuitize less of their savings that is considered appropriate. In Australia, the setting for this study, the government has proposed a one-page, simplified and standardized Fact Sheet for retirement income products, with the aim of enhancing retiree decision making. We conducted an online discrete choice experiment with 902 participants aged between 55 and 67 years to test the effect of the information items prescribed for the proposed Fact Sheet. We tested three versions of the Fact Sheet, varying the amount of text, and inclusion of graphs and tables in a between-subjects design. Participants are asked to make 12 pair-wise choices between four different retirement income products. We find that consumers were likely to choose the Annuity/Account-Based Pension (ABP) hybrid and the Annuity 34% and 33% of the time respectively. Contrary to the actual behaviour of Australian retirees (who predominantly choose ABPs), the ABP was least preferred (14%). We find that the government-proposed product rating and the income level are the most important prescribed information items that drive decisions to choose retirement income products, while items such as Access to Capital and Death Benefits play a minor role. Compared to the text-only treatment, the Annuity and the Annuity/APB hybrid are more likely to be chosen in the versions with graphs and tables, in which the product rating is more salient. Our findings suggest that the Fact Sheet design, especially the derivation of the prescribed product rating, drive decision-making, so must be carefully designed.
About the speaker:
Inka Eberhardt is a research fellow at ARC Centre of Excellence in Population Ageing Research (University of New South Wales, Australia). Through field experiments, lab-in-the-field experiments and survey research, Inka examines the underlying mechanisms of people’s financial decision-making. Inka is involved in a 5-year project with the Dutch pension fund of the retail sector, Bedrijfstakpensioenfonds voor de Detailhandel, which investigates effective pension communication and retirement savings behavior. Together with Michael Sanders and Janna Ter Meer from the Behavioural Insights Team (London, UK) and Paul Smeets, Inka is working on a meta-analysis on social norms. Furthermore, Inka is working on a project researching financial giving behavior in a game show setting. Finally, Inka is working with Hazel Bateman to analyze the impact of product disclosure on retirement income product choice.
Additional information regarding this event will be updated here as it becomes available.