Allocation of Expenditures in Elderly Households and the Cost of Widowhood

Daniel Burkhard

Swiss Journal of Economics and Statistics (SJES), 2017, vol. 153, issue 4, 371-401

Abstract: Widowhood and retirement change the economic environment of elderly households. While retirement changes income and expenditure patterns, widowhood fundamentally changes the structure of the household. Besides high non-monetary cost of losing the partner, resources are no longer shared and economies of scale arising from joint consumption are lost. This paper applies a collective household model to expenditure data on elderly households in Switzerland. The findings suggest that 44 % of household resources are assigned to wives and both spouses save roughly 27 % or, on average, 800 Swiss Francs on monthly expenditures relative to living apart. Estimates of indifference scales indicate that men suffer a financial loss after losing their wife, while widowed women do not.

Keywords: Collective household model; indifference scale; resource shares; economies of scale in consumption; Engel curves; elderly households (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ses:arsjes:2017-iv-2

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