| Abstract: |
Few retirees use reverse mortgages. In this paper, we investigate how
financial literacy and prior knowledge of the product influence take-up by
conducting a stated-preference experiment. We exogenously manipulate
characteristics of reverse mortgages to tease out how consumers value them and
investigate differences by financial literacy and prior knowledge of reverse
mortgages. We find that those with higher financial knowledge are more likely
to know about reverse mortgages, not more likely to purchase them at any cost
but are more sensitive to the interest rate and the insurance value of these
products in terms of the non-negative equity guarantee. |