A National Risk Aversion Perspective on Pension Contributions and Benefits Paid: Insights From OECD Countries

Abstract

This study delves into the role of national risk aversion culture and other institutional factors, such as financial efficiency, stock market volatility, technology development, age dependency, labor education, life expectancy, and mortality rate, in shaping pension contributions and paid benefits, with evidence drawn from OECD countries. Reputable data sources, such as OECD Statistics, the Global Preference Survey, Global Financial Data, and World Development Indicators, were utilized in the study. The authors adopted a two-way fixed effects regression model and other alternative estimators (FGLS and GMM) to address heteroscedasticity, serial correlation, and potential endogeneity. The sensitivity and robustness checks confirmed the significant impact (more than 60%) of national risk aversion and other institutional factors on pension contributions and benefits paid. This study aims to bridge the gap between theoretical perspectives and practical implications for policymakers and individuals in developing suitable risk-based pension programs and improving the management practices of pension systems.