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Optimal Aging and Death: Understanding the Preston Curve

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Author Info

  • Carl-Johan Dalgaard

    (Department of Economics, University of Copenhagen)

  • Holger Strulik

    (University of Hannover)

Abstract

The present study examines whether the Preston curve reflects a causal impact of income on longevity or, for example, factors correlated with both income and life expectancy. In order to understand the Preston curve better, we develop a model of optimal intertemporal consumption in which the representative consumer is subject to physiological aging. In modeling aging we draw on recent research in the fields of biology and medicine. The speed of the aging process, and thus the time of death, are endogenously determined by optimal health investments. We calibrate the model to US data and proceed to show that the model accounts for nearly 80% of the cross-country differences in life expectancy that the Preston curve captures.

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File URL: http://www.econ.ku.dk/english/research/publications/wp/dp_2011/1109.pdf/
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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 11-09.

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Length: 30 pages
Date of creation: Jul 2010
Date of revision: Mar 2011
Handle: RePEc:kud:kuiedp:1109

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Related research

Keywords: aging; longevity; health investments; savings; Preston curve;

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References

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  1. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "Economic Growth and the Demographic Transition," NBER Working Papers 8685, National Bureau of Economic Research, Inc.
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Cited by:
  1. Prettner, Klaus & Bloom, David E. & Strulik, Holger, 2013. "Declining fertility and economic well-being: Do education and health ride to the rescue?," Labour Economics, Elsevier, vol. 22(C), pages 70-79.
  2. Jean-Yves DUCLOS & Bouba HOUSSEINI, 2013. "Life quantity, life quality and longevity: An intertemporal social evaluation framework," Working Papers P79, FERDI.

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