NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Gastón Illanes

Department of Economics
Northwestern University
Kellogg Global Hub, Room 3421
2211 Campus Drive
Evanston, IL 60208
Tel: 847/491-8227

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NBER Program Affiliations: IO
NBER Affiliation: Faculty Research Fellow
Institutional Affiliation: Northwestern University

NBER Working Papers and Publications

September 2019Retirement Policy and Annuity Market Equilibria: Evidence from Chile
with Manisha Padi: w26285
Retirement policy has indirect effects on its beneficiaries, through the “crowd-out” or “crowd-in” of insurance markets. We study how retirement policy in Chile, which limits the drawdown of retirement assets but otherwise does not provide or require fixed income in retirement, results in more than 60% of eligible retirees purchasing private annuities at low prices. We estimate a demand model to show that replacing this voluntary policy with partial mandatory annuitization and removing limits on drawdowns causes the private annuity market to partially unravel. Under our model, this reform leads to a welfare increase equivalent to US$4,000 of additional pension savings on average, but welfare effects are heterogenous and many retirees would be harmed due to the higher prices of private annu...
May 2019Fiduciary Duty and the Market for Financial Advice
with Vivek Bhattacharya, Manisha Padi: w25861
Fiduciary duty may combat principal-agent problems in the provision of financial advice, but it may also impose costs through legal liability. We study the effects of fiduciary duty on the deferred annuity market using transaction-level data. Leveraging state-level variation in common law fiduciary duty, we find that it raises risk-adjusted returns by 25 bp without decreasing transacted volume. We develop a model of entry and advice provision, which shows that fiduciary duty operates by directly constraining low-quality advice rather than by solely increasing compliance costs. Overall, results suggest that expanding fiduciary duty would improve investor welfare.
 
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