Time-Inconsistent Preferences, Retirement, and Increasing Life Expectancy

Shou Chen and Guangbing Li

Mathematical Problems in Engineering, 2019, vol. 2019, 1-9

Abstract:

We study consumption behavior, retirement decisions, and endogenous growth within a dynamic equilibrium when individuals have present-biased preferences. Compared to individual with exponential preferences, individual with hyperbolic preferences will choose to retire early for present-biased preferences but to delay retirement for the initial time preference rate. We extend the benchmark equilibrium model to age-dependent survival law and solve numerically the equilibrium effects. It shows that, at the same age, the consumption-capital ratio may have slightly positive effect on increasing life expectancy before retirement but has a significantly positive effect on it after retirement.

Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:hin:jnlmpe:8681471

DOI: 10.1155/2019/8681471

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