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Life expectancy and old age savings

Author

Listed:
  • Mariacristina De Nardi
  • Eric French
  • John Bailey Jones

Abstract

Rich people, women, and healthy people live longer. We document that this heterogeneity in life expectancy is large. We use an estimated structural model to assess the impact of life expectancy variation on the elderly?s savings. We find that the differences in life expectancy related to observable factors such as health, gender, and income have large effects on savings, and that these factors contribute by similar amounts. We also show that the risk of outliving one?s expected lifespan has a large effect on the elderly?s saving behavior.

Suggested Citation

  • Mariacristina De Nardi & Eric French & John Bailey Jones, 2009. "Life expectancy and old age savings," Working Paper Series WP-08-18, Federal Reserve Bank of Chicago.
  • Handle: RePEc:fip:fedhwp:wp-08-18
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    References listed on IDEAS

    as
    1. Deaton, Angus, 1991. "Saving and Liquidity Constraints," Econometrica, Econometric Society, vol. 59(5), pages 1221-1248, September.
    2. Mariacristina De Nardi & Eric French & John Bailey Jones, 2005. "Differential mortality, uncertain medical expenses, and the saving of elderly singles," Working Paper Series WP-05-13, Federal Reserve Bank of Chicago.
    3. Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2004. "Do the Rich Save More?," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 397-444, April.
    4. Michael D. Hurd & Daniel McFadden & Angela Merrill, 2001. "Predictors of Mortality among the Elderly," NBER Chapters, in: Themes in the Economics of Aging, pages 171-198, National Bureau of Economic Research, Inc.
    5. Gan, Li & Gong, Guan & Hurd, Michael & McFadden, Daniel, 2015. "Subjective mortality risk and bequests," Journal of Econometrics, Elsevier, vol. 188(2), pages 514-525.
    6. Feenberg, Daniel & Skinner, Jonathan, 1994. "The Risk and Duration of Catastrophic Health Care Expenditures," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 633-647, November.
    7. Hubbard, R. Glenn & Skinner, Jonathan & Zeldes, Stephen P., 1994. "The importance of precautionary motives in explaining individual and aggregate saving," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 59-125, June.
    8. Orazio P. Attanasio & Carl Emmerson, 2003. "Mortality, Health Status, and Wealth," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 821-850, June.
    9. David A. Wise, 2001. "Themes in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise01-1.
    10. Eric French & John Bailey Jones, 2004. "On the distribution and dynamics of health care costs," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(6), pages 705-721.
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    More about this item

    Keywords

    Wealth; Retirement income;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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