Unintended consequences of minimum annuity laws: An experimental study

Abigail Hurwitz*, Orly Sade, Eyal Winter

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Scopus citations


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or are considering implementing mandatory minimum annuity laws (e.g., Singapore and Israel), whereas others have repealed or are considering repealing such legislation (e.g., the U.K.).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.

Original languageAmerican English
Pages (from-to)208-222
Number of pages15
JournalJournal of Economic Behavior and Organization
StatePublished - Jan 2020

Bibliographical note

Publisher Copyright:
© 2019


  • Anchoring
  • Household finance
  • Mandatory annuity


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