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The Health Hump

Holger Strulik ()

JODE - Journal of Demographic Economics, 2017, vol. 83, issue 2, 245-258

Abstract: In this paper, I suggest a novel explanation for a hump-shaped age-consumption profile, based on human aging. The model integrates health in the utility function and utilizes recent estimates of the effects of health on the marginal utility of consumption. The parsimonious model has a closed-form solution for the age of peak consumption and the consumption level at that age relative to initial consumption. A calibration of the model with data from gerontology produces an empirically plausible hump in consumption.

Keywords: Life-cycle consumption; Health; Aging (search for similar items in EconPapers)
JEL-codes: D91 E21 I10 (search for similar items in EconPapers)
Date: 2017-06-01
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Working Paper: The health hump (2015) Downloads
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Handle: RePEc:ctl:louvde:v:83:y:2017:i:2:p:245-258