Old Age Risks, Consumption, and Insurance

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

No 18047, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Consumption; insurance (search for similar items in EconPapers)
JEL-codes: D12 D15 E21 H31 I13 (search for similar items in EconPapers)
Date: 2023-03
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP18047 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

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 (2020)
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: https://EconPapers.repec.org/RePEc:cpr:ceprdp:18047

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP18047

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().