Cormac O'Dea is an Assistant Professor at the Yale University Economics Department. Cormac is also a Research Associate of the IFS. He previously worked at the IFS from 2007 to 2017, and was an Associate Director from 2016 to 2017.
PhD Economics, University College London, 2016
MPhil (Distinction) Economics, University of Cambridge, 2007
BA (First Class Honours) Economics, Trinity College Dublin, 2006
The “annuity puzzle” refers to the fact that annuities are rarely purchased despite the longevity insurance they provide. Most explanations for this puzzle assume that indi-viduals have accurate expectations about their future survival. We provide evidence that individuals misperceive their mortality risk, and study the demand for annuities in a setting where annuities are priced by insurers on the basis of objectively-measured survival probabilities but in which individuals make purchasing decisions based on their own subjective survival probabilities. Subjective expectations have the capacity to explain signiﬁcant rates of non-annuitization, yielding a quantitatively important explanation for the annuity puzzle.
We document that households in the UK with extremely low measured income tend to spend much more than those with merely moderately low income. This phenomenon is evident throughout three decades worth of microdata and across different employment states, levels of education and marital statuses.
The nature of the relationship between lifetime income and saving rates is a longstanding empirical question and one that has been surprisingly difficult to answer. We use a new data set containing both individual survey data on wealth holdings and administrative data on earnings histories to examine this question.
We put forward a method for estimating discount rates using wealth and income data. We build consumption from these data using the budget constraint. Consumption transitions yield discount rates by household groups. Applying this technique to a sample of older households, we find a similar distribution to those previously estimated using field data, though with a much lower mean than those found using experiments. Surprisingly, among this older population, patience is negatively correlated with education and numeracy. This goes against the positive correlation found for younger populations in experiments and some field studies. We discuss potential explanations for this result.
This paper provides a comprehensive comparison of the financial incentive to work in Ireland and the UK. It uses closely harmonised tax and benefit microsimulation models for both countries, based on
household survey data, to provide an accurate and representative picture of the financial incentive to be in employment and to progress facing key groups in both countries.
For many years, survey data on household wealth have been somewhat limited, but the situation is improving in the UK and internationally. This paper uses the new Wealth and Assets Survey (WAS) to document some key features of the distribution of household wealth in Great Britain.