International Pension Research Association (IPRA) Webinar on
Adam Smith’s Reversionary Annuity: Money’s Worth, Default Options, and Auto Enrolments
Speaker: Moshe Milevsky (York University)
Date: 19 July 2023, 12-1pm UTC time zone (10-11pm AEST Sydney, Australia) (for other time zones click here)
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Adam Smith’s Reversionary Annuity: Money’s Worth, Default Options, and Auto Enrollment
Presentation by Moshe A. Milevsky
Click here to view the research paper (external link)
Abstract: When Adam Smith – author of Wealth of Nations (1776) and Theory of Moral Sentiments (1759) – joined the University of Glasgow as a 28-year-old professor in 1751, he participated in a “benefit scheme” that was unique for its time, although quite common in the 21st century. The scheme offered participants a choice of levels at which to contribute savings to a fund, ranging from 2% to 10% of wages, with benefits granted in the form of a reversionary annuity to a spouse and/or lump sum to children. This lecture (i.) describes the scheme in financial and actuarial terms, (ii.) values Smith’s annuity and (iii.) examines the choices made by participants; a scheme which was prudently managed by Presbyterian ministers in the Church of Scotland. The (novel) research contribution is to leverage archival data to measure the extent of insurance anti-selection and to show that debates around choice architecture, default options and auto enrollment which infuse the pension & retirement literature in the 21st century, were prevalent in the mid 18th. For the record, Adam Smith actively contributed at the highest allowed rate, but it wasn’t a “good” investment for him ex ante or ex post. As for why, one must attend the presentation…
About the speaker:
Moshe Arye Milevsky is a tenured professor at Schulich and a member of the Graduate Faculty of Mathematics & Statistics at York University. His research interests are at the intersection of pensions & retirement, actuarial mathematics and the history of financial products. In addition to academic research work, Professor Milevsky is a fin-tech entrepreneur with a number of U.S. patents and computational innovations in the field of retirement income financing.
This webinar was hosted by the International Pension Research Association (IPRA), in collaboration with the ARC Centre of Excellence in Population Ageing Research (CEPAR), the Pension Research Council at the Wharton School of the University of Pennsylvania, Netspar at Tilburg University, WTW, the International Organisation of Pension Supervisors (IOPS), and the OECD.
IPRA is an international organisation established with the aim of improving the quality and impact of research on pensions and related ageing issues to optimise social and economic outcomes for an ageing world. Individual researchers and organisations, including policy groups from across the world, interested in pensions and related ageing issues, are welcome to join IPRA. For more information visit iprassn.org.For more information visit iprassn.org.