EconPapers    
Economics at your fingertips  
 

Health and Mortality Delta: Assessing the Welfare Cost of Household Insurance Choice

Stijn Van Nieuwerburgh, Motohiro Yogo and Ralph Koijen

No 633, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: We develop a pair of risk measures for the universe of health and longevity products that includes life insurance, annuities, and supplementary health insurance. Health delta measures the differential payoff that a policy delivers in poor health, while mortality delta measures the differential payoff that a policy delivers at death. Optimal portfolio choice simplifies to the problem of choosing a combination of health and longevity products that replicates the optimal exposure to health and mortality delta. For each household in Health and Retirement Study, we calculate the health and mortality delta implied by its ownership of life insurance, annuities including defined-benefit plans, supplementary health insurance, and long-term care insurance. For the median household aged 51 to 58, the welfare cost of market incompleteness or suboptimal portfolio choice is 0.22% of wealth over two years and 27% of wealth over the remaining lifetime.

Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Health and Mortality Delta: Assessing the Welfare Cost of Household Insurance Choice (2016) Downloads
Working Paper: Health and Mortality Delta: Assessing the Welfare Cost of Household Insurance Choice (2014) Downloads
Working Paper: Health and Mortality Delta: Assessing the Welfare Cost of Household Insurance Choice (2011) Downloads
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:red:sed011:633

Access Statistics for this paper

More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

 
Page updated 2020-07-10
Handle: RePEc:red:sed011:633