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Optimal Aging and Death

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  • Carl-Johan Dalgaard
  • Holger Strulik

Abstract

This study introduces physiological aging into a simple model of optimal in- tertemporal consumption. In this endeavor we draw on the natural science literature on aging. According to the purposed theory, the speed of the aging process and the time of death are endogenously determined by optimal health investments. At the same time, physiological aspects of the aging process influence optimal savings and health investment. We calibrate the model for the average US male in 2000 and proceed to show that the calibrated model accounts well for the cross-country link between labor productivity and life expectancy in the same year (\the Preston curve"); cross-country income di erences can explain di erences in life expectancy at age 20 of up to a decade. Moreover, techno- logical change in health care of about 1.1% per year can account for the observed shift in the Preston curve between 1980 and 2000.K

Suggested Citation

  • Carl-Johan Dalgaard & Holger Strulik, 2010. "Optimal Aging and Death," PGDA Working Papers 5810, Program on the Global Demography of Aging.
    • Handle: RePEc:gdm:wpaper:5810
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    File URL: http://www.hsph.harvard.edu/pgda/WorkingPapers/2010/PGDA_WP_58.pdf
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    References listed on IDEAS

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    1. Optimal aging
      by Economic Logician in Economic Logic on 2011-01-21 22:25:00

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    Cited by:

    1. Strulik, Holger, 2011. "Optimal Aging with Uncertain Death," Hannover Economic Papers (HEP) dp-488, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    2. Hui He & Kevin X.D. Huang & Lei Ning, 2021. "Why Do Americans Spend So Much More On Health Care Than Europeans?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(4), pages 1363-1399, November.
    3. Carl-Johan Dalgaard & Holger Strulik, 2017. "The Genesis of the Golden Age: Accounting for the Rise in Health and Leisure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 132-151, March.
    4. He, Hui & Huang, Kevin X. D. & Hung, Sheng-Ti, 2014. "Are Recessions Good for Your Health? When Ruhm Meets GHH," Dynare Working Papers 31, CEPREMAP.
    5. Strulik, Holger, 2011. "Health and Education: Understanding the Gradient," Hannover Economic Papers (HEP) dp-487, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    6. Hui He & Kevin x.d. Huang, 2013. "Why Do Americans Spend So Much More on Health Care than Europeans?--A General Equilibrium Macroeconomic Analysis," Vanderbilt University Department of Economics Working Papers 13-00005, Vanderbilt University Department of Economics.

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    More about this item

    Keywords

    Aging; Longevity; Health Investments; Savings; Preston Curve;
    All these keywords.

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