693 B
693 B
Tontines
Definition
A system of raising government revenue through life annuities where survivors inherit the annuities of those who die, continuing until the last survivor receives all remaining payments, named after their inventor Lorenzo Tonti.
Source Chapter
Book V, Chapter 3
Context
Smith explains tontines as a method of granting annuities that raises more money than separate life annuities because people overestimate their chances of long survival and are willing to pay premiums for survivorship rights.
Economic Domain
Regulation