Tontines, Not Tocsins

Remember the inheritance device behind the death in Agatha Christie's mystery 4:50 From Paddington? (That novel is also known as What Mrs. McGillicuddy Saw). Or Thomas Costain's novel The Tontine? Kent McKeever of Columbia Law School investigates tontines further.

Kent McKeever, Columbia Law School, A Short History of Tontines.

The tontine, with its underlying premise that the living participants benefit from the death of their fellows, does not deserve its shadowy reputation. It had some success in its original purpose, as a means of government fund raising. It was most successful as a means of private development and investment from around 1780 through the 1850's. However, it was used as a gimmick in the selling of life insurance and as a cover for outright fraud in the latter part of the 19th Century. It was also subject to attack from writers who found the notion of gambling on other people's deaths unseemly. The tontine developed an aura of shadiness, and was eventually abandoned. If re-developed as a form of insurance for the long-lived, it may be worth rehabilitation as an investment tool.

Download the abstract from SSRN here.