Risk aversion and longevity in an overlapping generations model

Koichi Futagami and Miho Sunaga

Journal of Macroeconomics, 2022, vol. 72, issue C

Abstract: We analyze how increasing longevity affects economic development based on differences in the risk attitudes of young and old individuals. We construct an overlapping generations model given an economy grows with the help of the capital and intermediate goods produced by individual activities. The outcomes of these activities are stochastically determined. We analytically and numerically show that increasing longevity hinders capital accumulation in the economy when old individuals are more risk-averse than young individuals. Thus, if old individuals are less willing to take risks in the economy, population aging will consequently slow economic growth.

Keywords: Risk aversion; Longevity; Overlapping generations model; Population aging (search for similar items in EconPapers)
JEL-codes: E20 O40 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:72:y:2022:i:c:s0164070422000179

DOI: 10.1016/j.jmacro.2022.103415

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