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We analyze the effect of means-tested benefits on annuitization decisions. Most industrialized countries provide a subsistence level consumption floor in old age, usually in the form of means-tested benefits. The availability of such means-tested payments creates an incentive to cash out (occupational) pension wealth for low and middle income earners, instead of taking the annuity. Agents trade-off the advantages from annuitization, receiving the wealthenhancing mortality credit, to the disadvantages, giving up "free" wealth in the form of means-tested supplemental benefits. We find that the availability of means-tested benefits can reduce the desired annuitization levels substantially. Using individual level data, we show that the model's predicted annuitization rates as a function of the level of pension wealth are roughly consistent with the cash-out patterns of occupational pension wealth observed in Switzerland.

chapter 1 Why study information economics? -- chapter 2 How to use this book -- part PART I Information as an economic good -- chapter 3 What is information? -- chapter 4 The value of information -- chapter 5 The optimal amount of information -- chapter 6 The production of information -- part PART II How the market aggregates information -- chapter 7 From information to prices -- chapter 8 A Introduction -- chapter 9 Coordination problems -- chapter 10 Learning and cascades -- chapter 11 The macroeconomics of information -- part PART III Asymmetric information -- chapter 12 The winner's curse -- chapter 13 Information and selection -- chapter 14 Optimal contracts -- chapter 15 The revelation principle -- chapter 16 A Introduction -- part PART IV The economics of self-knowledge -- chapter 17 Me, Myself, and I.

This paper analyzes a recent ballot in which two virtually identical popular initiatives, both demanding a decrease in the legal age of retirement in Switzerland, led to differences in approval rates of nearly seven percentage points. Based on this unique natural experiment, the existence of emphasis framing effects is tested for and their determinants are identified outside of the controlled settings of laboratories. Nonetheless, the analyzed setting allows for considerably more control than usually available in the field: All party, government and interest group recommendations were symmetric for both initiatives, and the simultaneous vote rules out potential variation of individual preferences and compositional changes of the electorate over time. Using community and individual level data it is shown that the difference in approval rates is largely due to the different emphases in the initiatives' titles.

We exploit a recent change in voting procedures in one of the two chambers of the Swiss parliament to explore how transparency affects the votes of Members of Parliament (MPs). Until 2013, the Council of States (St nderat) decided by hand rising. While publicly observable at the time of the vote, MPs decisions could only be verified through time-consuming screening of online videos ex post. In 2014 - in the middle of the legislation period, the chamber switched to electronic voting. As MPs decisions are available online, transparency and observability of MP voting increased. Our analysis is based on individual voting behavior from all final passage votes in the 2011-2015 legislation period. In a difference-in-difference framework, the larger chamber, the National Council (Nationalrat), serves as control group. Voting procedures in the latter have not changed since 2007, the legislative text is identical in both chambers. After the reform, members of the Council of States are significantly less likely to deviate from their party line. We also observe a higher probability to abstain even though a strong party line exists. Our results are in line with increased observability of MP votes and higher conformity pressure from parties and party groups.

Most industrialized countries provide a subsistence level consumption floor in old age, usually in the form of means-tested benefits or income supplements. The availability of such means-tested payments creates an incentive to optimally cash out (occupational) pension wealth for low and middle income earners. In case the guaranteed old-age income exceeds first-pillar benefits, individuals with low wealth find it unambiguously optimal to cash out, because the annuity income from pension wealth reduces the means tested benefits one for one. Agents with intermediate wealth levels weigh the advantages from annuitization, namely the longevity risk insurance and a smooth consumption pattern, against the disadvantage, which is giving up free wealth in the form of means-tested benefits. We analyze optimal annuity demand and consumption/savings decisions in a realistic life-cycle model under a social security scheme in which means-tested benefits can be claimed if income falls below a certain subsistence level. The model is calibrated to Switzerland, which is an interesting case because it combines generous means-tested benefits with a large second pillar in which accumulated pension wealth can be cashed out at retirement. We show that the predicted annuitization rates are roughly consistent with the cash-out patterns observed in Switzerland. Means-tested benefits can reduce the annuitization levels substantially, which can generate both non-negligible welfare losses and high government expenditures.

We use a change in the voting procedures of one of the two chambers of the Swiss parliament to explore how transparency affects the voting behavior of its members. Until 2013, the Council of States (Ständerat) had voted by a show of hands. While publicly observable at the time of the vote, legislators' decisions could only be verified ex post through the time-consuming screening of online videos. In 2014, halfway through the legislative period, the chamber switched to electronic voting. Since then, the individual votes of legislators have become more transparent and observable as their votes are now recorded electronically and, in some cases, published online. Our analysis is based on individual voting behavior in all final passage votes during the 2011-2015 legislative period. In a difference-in-difference framework, the larger chamber, the National Council (Nationalrat), serves as a control group. Not only have the voting procedures of the National Council remained unchanged since 2007 but also the legislative texts on which both chambers vote are the same. This unique framework makes it possible to estimate the causal effects of voting procedures on legislators' choices. Since the voting system reform, members of the Council of States are significantly less likely to deviate from their party line. Our results reflect the increased observability of legislators' votes and the greater conformity pressure exerted by political parties, as easier monitoring enables them to enforce discipline among their members.

We study whether the number of signatures collected to qualify a popular initiative affects the probability of reforming the status quo. The initiative process is modeled as a sequential game under uncertainty: petitioners make an entry decision and collect signatures to qualify the initiative. Politicians decide about a political compromise - a counter proposal - after which petitioners have the option to withdraw the initiative before the vote. In equilibrium, politicians infer the initiative's popularity from the number of signatures and collection time. They more likely grant counter proposals to initiatives perceived as a threat to the status quo. To prove their success probability, petitioners sometimes have the incentive to collect more signatures than required for qualification. We test model predictions based on the data set of all Swiss constitutional initiatives at federal level between 1891 and 2010. Overall, we find supporting evidence for the model mechanisms. Reforms are most likely once a far-reaching counter proposal is issued such that the initiative is withdrawn. We find a significant effect of collecting more signatures than required on the probability of provoking a compromise.

This paper presents new evidence on how the annuitization decision is affected by changes in the annuity's value. We take advantage of an unprecendented change in policy, which in 2004 moderated the super-mandatory Swiss occupational pension scheme: The 20 percent reduction in the rate at which retirement capital is translated into a life-long annuity equates to a net present value loss of approximately 20'000 SFR (20'000 USD) for the average retiree. Using administrative data and correcting for anticipation effects, we show that due to the change in policy there was an approximately 8 percentage point change in the share of men choosing to annuitize their savings. We also show that the estimated responsiveness of the cash-out decision to variations in a utility based measure for the annuity value is comparable to results of previous studies, which employed completely different sources of variation in the annuity's value.

Disability insurance (DI) beneficiaries lose part or all of their benefits if earnings exceed certain thresholds ("cash-cliffs"). This implicit taxation is considered the prime reason for the low number of beneficiaries who expand work and reduce benefit receipt. We analyse a conditional cash programme that incentivises work related reductions of disability benefits in Switzerland. Four thousand DI beneficiaries received an offer to claim up to CHF 72,000 (USD 77,000) if they expand work and reduce benefits. Initial reactions to the programme announcement, measured by call-back rates, are modest. By the end of the field phase, the take-up rate is only 0.5 %.