The TIAA-CREF Institute announced today (Jan. 3) that John Chalmers, an associate professor of finance at the UO's Lundquist College of Business, was one of two recipients of the 18th annual TIAA-CREF Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security.
Chalmers and Jonathan Reuter, an assistant professor of finance at Boston College, were recognized for their paper, “How Do Retirees Value Life Annuities? Evidence from Public Employees,” which used administrative data from approximately 32,000 retirements between 1990 and 2002 in the Oregon Public Employees Retirement System (PERS) to study the demand for life annuity payments by a large sample of retirees.
The paper’s findings revealed that 85 percent of PERS retirees chose to receive all of their pension benefits as life annuity payments, challenging the idea that the demand for life annuities is inherently low. Chalmers and Reuter also found that:
- Retirees suffering from poor health are less inclined than healthier retirees to choose life annuities, suggesting a correlation between a person’s perceived longevity and investment choice.
- Demand for life annuities does not correspond to the actuarial value of life annuity payments, suggesting that retirees lack the financial knowledge required to compare life annuities to lump sums.
- Demand for life annuities is lower when stock market returns are higher, suggesting that some PERS retirees might overvalue the projected investment returns that a lump sum will generate.
“Chalmers and Reuter have made an important contribution to our understanding of how retirees make annuitization decisions,” said Stephanie Bell-Rose, TIAA-CREF senior managing director and head of the TIAA-CREF Institute. “Their work challenges conventional wisdom and provides actionable solutions for policymakers looking to enhance Americans’ retirement security.”
Chalmers, the Abbott Keller Distinguished Research Scholar at Lundquist, is the academic director of the UO's Finance and Securities Analysis Center. His research interests include the study of taxes and transaction costs and their impact on security returns.
The Samuelson Award is named after Nobel Prize winner Paul A. Samuelson in honor of his achievements in the field of economics. The winner is selected by a panel of five distinguished judges. The TIAA-CREF Institute will present the award and the $10,000 prize in Philadelphia during the annual meeting of the Allied Social Science Associations.
TIAA-CREF is a national financial services organization and the leading provider of retirement services in the academic, research, medical and cultural fields. The TIAA-CREF Institute helps advance the ways individuals and institutions plan for financial security and organizational effectiveness.
- by Melissa Foley, UO Office of Strategic Communications