Health accidents and wealth decline in old age

Hippolyte d'Albis, Najat El Mekkaoui and Bérangère Legendre
Additional contact information
Najat El Mekkaoui: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Bérangère Legendre: IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc

PSE Working Papers from HAL

Abstract: This paper explores the impact of a health shock and changes in survival probability on the savings and portfolio choices of older individuals. Using a theoretical framework featuring a portfolio choice that incorporates imperfect annuity markets, we analyze how elderly individuals, whose survival probability has been altered by a health shock, allocate their resources. A difference-indifferences approach complements the theoretical approach by taking into account the effect of age and cohort, and controlling for selection bias related to health events at older ages. Our analysis utilizes a panel of 5570 observations from the Survey of Health, Aging, and Retirement in Europe (SHARE, 2011 and 2017). Both theoretical and empirical findings converge, indicating that experiencing a health accident such as a stroke or heart attack leads to a decrease in safe savings. Consequently, investing in annuities becomes crucial in enabling individuals to mitigate the consequences of poor health in aging economies.

Keywords: Life cycle model; Saving behavior; Health shock; Difference-in-differences (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-age and nep-dge
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04174032v1
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://shs.hal.science/halshs-04174032v1/document (application/pdf)

Related works:
Journal Article: Health accidents and wealth decline in old age (2023)
Working Paper: Health accidents and wealth decline in old age (2023)
Working Paper: Health accidents and wealth decline in old age (2023)
Working Paper: Health accidents and wealth decline in old age (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-04174032

Access Statistics for this paper

More papers in PSE Working Papers from HAL
Bibliographic data for series maintained by CCSD ().