Old Age Risks, Consumption, and Insurance / Richard Blundell, Margherita Borella, Jeanne Commault, Mariacristina De Nardi.

Format:

Book

Author/Creator:

Blundell, Richard.

Contributor:

National Bureau of Economic Research.

Borella, Margherita.

Commault, Jeanne.

De Nardi, Mariacristina.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27348.

NBER working paper series no. w27348

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

In the U.S, after age 65, households face income and health risks and a large fraction of these risks are transitory. While consumption significantly responds to transitory income shocks, out-of-pocket medical expenses do not. In contrast, both consumption and out-of-pocket medical expenses respond to transitory health shocks. Thus, most U.S. elderly keep their out-of-pocket medical expenses close to a satiation point that varies with health. Consumption responds to health shocks mostly because adverse health shocks reduce the marginal utility of consumption. The effect of health on marginal utility changes the optimal transfers due to health shocks.

Notes:

Print version record

June 2020.