This advertisement succeeded in making the concept of longevity personal and immediate by asking people the age of the
oldest person they knew. This question transformed the abstraction of longevity into a tangible, personal experience. However,
what does the histogram represent? The viewer may mistake the
histogram for the distribution of future life span. It is not. The
precise interpretation of the resulting histogram may be difficult and subject to misinterpretation. Regardless of the precise
interpretation, the histogram succeeds in making the concept
of longevity tangible for the viewer.
2. Use the four longevity risk diagrams to clarify
concepts and messages.
To reduce the confusion created by different meanings of longevity risk, the four frames of longevity risk (“flat curve,” “skinny
curve,” “skewed curve,” and “rising curve”) and the four diagrams of plural rationality (individualism, egalitarianism,
hierarchy, and fatalism) may serve as helpful devices to bring
communications into sharper focus.
For example, is the main message the risk caused by uncertainty in the mortality assumptions (“skinny curve”), or the risk of
using inadequate mortality assumptions (“skewed curve”)? If inadequate assumptions are the main problem, then the solution will
be to use more robust assumptions. On the other hand, if the main
concern is uncertain assumptions, then the solution may be related
to how risks are shared and who is best able to bear that risk.
Can individuals use longevity bonds to hedge longevity risk?
A product designed for systematic longevity risk (“skinny curve”)
would be ineffective against individual longevity risk (“flat curve”).
Cross-culturally, a solution that makes sense for an egalitarian group that wants to mitigate all old-age risks (“rising curve”)
may be incomprehensible for individualists who are concerned
about the variability in their remaining lifetimes (“flat curve”).
To improve communication of longevity risk, one should acknowledge the different meanings, the different perspectives,
the different presuppositions, and the different worldviews
that inform our understanding of longevity risk. Awareness
of the frames from which longevity risk is discussed will help
us deliver our messages more effectively. Only then can public
policies and commercial solutions related to longevity risk be
communicated in a way that consumers and the public at large
find relevant and meaningful.
LIAW HUANG is a principal and senior research associate at
The Terry Group. TOM TERRY is founder and CEO of The Terry
Group. The authors are grateful to professor David Blake for his
invitation to contribute this paper to the Longevity 9 conference
in Beijing, to Carol Daskais Navin for her many helpful comments
that have improved this paper, and to Dave Ingram, who
introduced us to the concept of plural rationality.
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Income for Life,” Lifetime Income Risk Joint Task Force Discussion Paper.
Antolin, P. (2007). “Longevity Risk and Private Pensions,” OECD Working
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Bankers Life and Casualty Company (2013). “Longevity Risk and Reward for
Middle-Income Americans,” Center for a Secure Retirement.
Billingsley, P. (2012). Probability and Measure. John Wiley & Sons.
Fidelity Viewpoints. “Don’t take a lifestyle cut in retirement: Five ways to help
close your income gap, no matter what your age”. Retrieved Oct. 13, 2015, from
Huang, L., Ingram D., Terry, T., Thompson, M. (2013) Uncertain Times, Plural
Rationalities and the Pension Fiduciary. Cambridge Handbook of Institutional
Investment and Fiduciary Duty.
International Monetary Fund (2012). “The Financial Impact of Longevity Risk,”
Chapter 4 of Global Financial Stability, IMF Report, (April).
Thaler, R., Sunstein R. (2009). Nudge: Improving Decisions About Health,
Wealth, and Happiness. Penguin Books.
Olshansky, J., Antonucci, T., Berkman, L., et al. (2012). “Differences in Life
Expectancy Due To Race and Educational Differences Are Widening, And
Many May Not Catch Up,” Health Affairs 31( 8):1803 – 1813
Olshansky, J., Perry, D., Miller, R., Butler, R. (2006). “In Pursuit of the Longevity
Dividend: What should we be doing to prepare for the unprecedented aging of
humanity,” The Scientist.
Thompson, M., Ellis R., Wildavsky, A. (1990). Cultural Theory. Westview Press
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Retrieved Oct. 13, 2015, from http://www.treasury.gov/press-center/press-
1. Bloomberg Business, “Delta Lloyds Completes $16 Billion Longevity Swap
with RGA,” retrieved Oct. 13, 2015, from http://www.bloomberg.com/news/
2. A list of U.S. companies that have offered pension buy-outs can be obtained
from the Pension Rights Center, retrieved Oct. 13, 2015, from http://www.
3. Society of Actuaries, RP-2014 Mortality Tables Report, 2014.
4. See for example, “Probability and Measure”, P. Billingsley, John Wiley &
5. This component includes the effect of stochastic terms in the mortality
model as well as parameter uncertainty.
6. “Differences in Life Expectancy Due To Race and Educational Differences
Are Widening, And Many May Not Catch Up”, Olshansky, J., Antonucci, T.,
Berkman, L. et al. 2012.
7. “In Pursuit of the Longevity Dividend: What should we be doing to prepare
for the unprecedented aging of humanity?”, J. Olshansky, D. Perry, R. Miller, R.
Butler, The Scientist, March 2006.
8. Cultural Theory, Thompson, M., Ellis R., Wildavsky, A., Westview Press, 1990.
9. More explanation of clumsy solutions can be found in “Uncertain Times,
Plural Rationalities and Pension Fiduciary,” Cambridge Handbook of
Institutional Investment and Fiduciary Duty, 2013.
10. See Nudge: Improving Decisions About Health, Wealth, and Happiness by
Richard H. Thaler and Cass R. Sunstein.
11. Prudential Super Bowl commercial: “Stickers.” https://www.youtube.com/
Communicating Longevity Risk CONTINUED
TO IMPROVE COMMUNICATION OF LONGEVITY RISK, ONE SHOULD ACKNOWLEDGE THE
DIFFERENT MEANINGS, THE DIFFERENT PERSPECTIVES, THE DIFFERENT PRESUPPOSITIONS, AND
THE DIFFERENT WORLDVIEWS THAT INFORM OUR UNDERSTANDING OF LONGEVITY RISK.