The health hump
Holger Strulik ()
No 263, Center for European, Governance and Economic Development Research Discussion Papers from University of Goettingen, Department of Economics
In this paper, I suggest a novel explanation for a hump-shaped ageconsumption profile, based on human aging. The model integrates health in the utility function and utilizes recent estimates on 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: health; aging; life-cycle consumption (search for similar items in EconPapers)
JEL-codes: D91 E21 I10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo, nep-hea, nep-mac and nep-upt
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Journal Article: The Health Hump (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:263
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