Health and Wealth in a Life Cycle Model

John Scholz and Ananth Seshadri

Working Papers from University of Michigan, Michigan Retirement Research Center

Abstract: This paper presents a preliminary model of health investments over the life cycle. Health affects both longevity and provides flow utility. We analyze the interplay between consumption choices and investments in health by solving each household’s dynamic optimization problem to obtain predictions on health investments and consumption choices over the lifecycle. Our preliminary model does a good job of matching the distribution of medical expenses across households in the sample. We illustrate the scope of future model applications by examining the effects of a stylized Medicare program on patterns of wealth and mortality.

Pages: 34 pages
Date: 2010-09
New Economics Papers: this item is included in nep-dge, nep-hea and nep-mic
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Citations: View citations in EconPapers (16)

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