Joseph Briggs is an economist in the at the Federal Reserve Board of Governors. His research focuses on household financial decisions, lifecycle investing and portfolio choice, retirement saving, insurance holdings, and the long-term care insurance market. Prior to joining the Federal Reserve Board, Joseph finished a PhD in economics at New York University in 2016 and a bachelor’s degree in mathematics from North Carolina State University in 2010.
We estimate the joint demand for annuities, life insurance, and long-term care insurance in a model with exogenously incomplete markets. Using a new survey instrument, we find that there significant perceived counterparty risk in these insurance markets. Accounting for this risk, as well as several other sources of market incompletions, significantly decreases the demand for these insurance products: Agents do not want to purchase insurance products that are perceived to be risky and do not meet their insurance needs. Although many studies have cited puzzles around the lack of late-in-life insurance product (especially annuity) ownership, we find that observed household insurance portfolios are negligibly inefficient.