Health, Retirement and Consumption

Malene Kallestrup-Lamb, John Kennan and Bent Jesper Christensen
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Malene Kallestrup-Lamb: University of Aarhus

No 1156, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: The paper analyzes consumption decisions of retired workers, using Danish register data. A major puzzle, which motivates much of the analysis below, is that wealth actually increases for a large fraction (roughly half) of the people in our data. One would expect that wealth accumulated before retirement would be used to augment consumption in later life, with the implication that wealth should decline over time. The risk of large out-of-pocket medical expenditures is negligible in Denmark, so although explanations associated with such expenditures might explain similar patterns in U.S. data, these explanations are not plausible for Denmark (and therefore also questionable for the U.S.) Our analysis instead attempts to explain wealth paths using a model that emphasizes health-related fluctuations in the marginal utility of consumption.

Date: 2017
New Economics Papers: this item is included in nep-age, nep-dem and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed017:1156

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