Blundell, Richard;
(2024)
Old Age Risks, Consumption, and Insurance.
The American Economic Review
, 114
(2)
pp. 575-613.
10.1257/aer.20220555.
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Abstract
In the United States, 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 US 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.
| Type: | Article |
|---|---|
| Title: | Old Age Risks, Consumption, and Insurance |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1257/aer.20220555 |
| Publisher version: | https://doi.org/10.1257/aer.20220555 |
| Language: | English |
| Additional information: | This version is the version of record. For information on re-use, please refer to the publisher's terms and conditions. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10186300 |
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