Empirical essays on behavioral economics and lifecycle decisions

This dissertation consists of four empirical essays that study decisions on insurance, consumption and the accumulation and decumulation of wealth. The studies pay due attention to behavioral factors that may limit rationality, such as complexity and intertemporal choice. The first essay looks at the relationship between the saving decisions of specific groups in the Dutch labor market and whether or not they are covered by the occupational pension regime. Higher pension wealth turns out to be associated with lower private wealth accumulation, especially among the self-employed. The second essay examines whether the demand for health insurance is affected by the individual’s level of probability numeracy, which we define as the specific ability to understand and process probabilistic concepts. Our results indicate that those with intermediate levels of probability numeracy take out more health insurance, possibly due to ambiguity aversion. The third essay looks at the factors determining the decision to place a (visible) tattoo and relates this to several relevant economic and social outcomes, such as income and employment status and self-assessed health. We find some indications for less favorable outcomes for those with a tattoo, but the possibilities for causal inference are limited. The fourth essay studies the potential interest of Dutch homeowners in reverse mortgages. This is a mortgage loan that enables homeowners to liquidate a part of their housing wealth, without the need to move or increase monthly expenses. We find substantial potential interest, especially among the self-employed and those without children.