Denial of Death and Economic Behavior

Wojciech Kopczuk () and Joel Slemrod
Additional contact information
Joel Slemrod: University of Michigan

The B.E. Journal of Theoretical Economics, 2005, vol. advances.5, issue 1

Abstract: We model denial of death and its effect on economic behavior. Attempts to reduce death anxiety and the possibility of denial of mortality-relevant information interact with intertemporal choices and may lead to time-inconsistent behavior and other “behavioral” phenomena. In the model, repression of signals of mortality leads to underconsumption for unsophisticated individuals, but forward-sophisticated individuals may over-consume in anticipation of future denial and may seek ways to commit to act according to one’s mortality prospects as currently perceived. We show that the mere possibility of engaging in this kind of denial leads to time-inconsistent but efficient behavior. Refusal to face up to the reality of death may help explain a wide range of empirical phenomena, including the underutilization of tax-advanced inter vivos gifts and inadequate purchase of life insurance.

Keywords: time consistency; behavioral economics (search for similar items in EconPapers)
JEL-codes: D91 (search for similar items in EconPapers)
Date: 2005
View citations in EconPapers

Downloads: (external link)
http://www.bepress.com/cgi/viewcontent.cgi?article=1207&context=bejte (application/pdf)

Related works:
Working Paper: Denial of Death and Economic Behavior (2005)
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: http://EconPapers.repec.org/RePEc:bpj:bejtec:v:advances.5:y:2005:i:1:n:5

Access Statistics for this article

More articles in The B.E. Journal of Theoretical Economics from Berkeley Electronic Press
Series data maintained by Avi Warner ().