An Economic Model of Mortality Salience in Personal Financial Decision Making: Applications to Annuities, Life Insurance, Charitable Gifts, Estate Planning, Conspicuous Consumption, and Healthcare

• Main Author: Russell N James III
• Format: Article
• Language: English
• Published: New Prairie Press 2016-12-01
• Series: Journal of Financial Therapy
• Subjects: terror management theory
• Online Access: http://newprairiepress.org/jft/vol7/iss2/5

The study of personal mortality salience and the denial of death have a long history in psychology leading to the modern field of Terror Management Theory. However, a simple consumer utility function predicts many of the outcomes identified in experimental research in this field. Further, this economic approach explains a range of otherwise unexpected financial decision-making behaviors in areas as diverse as annuities, life insurance, charitable gifts and bequests, intra-family gifts and bequests, conspicuous consumption, and healthcare. With its relevance to such a wide range of personal financial decisions, understanding the impact of mortality salience can be particularly useful to advisors in related fields.