Old Age Risks, Consumption, and Insurance

Richard Blundell (), Margherita Borella, Jeanne Commault and Mariacristina De Nardi

No 27348, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: D1 D11 D12 D14 E2 E21 H2 H31 H51 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-age, nep-dem, nep-hea, nep-mac and nep-upt
Note: AG EH PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as Richard Blundell & Margherita Borella & Jeanne Commault & Mariacristina De Nardi, 2024. "Old Age Risks, Consumption, and Insurance," American Economic Review, American Economic Association, vol. 114(2), pages 575-613, February.
Published as Richard Blundell & Margherita Borella & Jeanne Commault & Mariacristina De Nardi, 2024. "Old Age Risks, Consumption, and Insurance," American Economic Review, vol 114(2), pages 575-613.

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Related works:
Journal Article: Old Age Risks, Consumption, and Insurance (2024)
Working Paper: Old Age Risks, Consumption, and Insurance (2023)
Working Paper: Old age risks, consumption, and insurance (2023)
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