Mortality and Life-Cycle Models
AbstractI compare two different ways of integrating mortality into life-cycle models: the standard additive model with time preferences, on the one hand, and a formulation that rules out the existence of time preference, but allows for risk aversion with respect to the length of life, on the other hand. These models are of similar complexity, but rather different in their fundamental assumptions. I show, however, that the latter formulation can reproduce all the predictions of the additive models with non-negative rates of time preference, as far as life-cycle behaviors under a single exogenous non-degenerate mortality pattern are considered. It leads, nonetheless, to radically different predictions for the effects of mortality changes.
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Bibliographic InfoPaper provided by Laboratoire d'Economie Appliquee, INRA in its series Research Unit Working Papers with number 0314.
Length: 50 pages
Date of creation: Jun 2003
Date of revision:
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Intertemporal choice; Risk Aversion; Intertemporal Elasticity of Substitution.;
Find related papers by JEL classification:
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-03-07 (All new papers)
- NEP-HEA-2004-03-07 (Health Economics)
- NEP-MAC-2004-03-07 (Macroeconomics)
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