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Differential Mortality, Uncertain Medical Expenses, and the Saving of Elderly Singles

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  • Mariacristina De Nardi

    ()
    (Research Federal Reserve bank of Chicago)

  • Eric French
  • John Bailey Jones

Abstract

People have heterogenous life expectancies: women live longer than men, rich people live longer than poor people, and healthy people live longer than sick people. People are also subject to heterogenous out-of-pocket medical expense risk. We show that all of these dimensions of heterogeneity are large for the elderly. Can these factors explain their lack of asset decumulation even at very advanced ages and the high saving rate of the income-rich elderly? We answer this question in two steps. We first estimate the uncertainty about mortality and out-of pocket medical expenditures as functions of sex, health, permanent income, and age. We then formalize a rich structural model of saving behavior for retired single households, and we estimate it by using the method of simulated moments

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 46.

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Date of creation: 03 Dec 2006
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Handle: RePEc:red:sed006:46

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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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Keywords: Saving; elderly; differential mortality; medical expense risk;

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References

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  1. Explaining heterogeneity in individual saving rates
    by Economic Logician in Economic Logic on 2009-01-24 02:38:00
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