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Rational Impatience ?

Author

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  • Antoine Bommier

    (GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper introduces a life-cycle model where impatience, instead of being driven by an exogenous discount function, results from the combination of risk aversion and mortality risks. Opting for such a formulation provides novel views on the impact of longevity extension on welfare, saving behavior and capital accumulation. In particular, we show that longevity extension may have much larger impacts on capital accumulation and equilibrium rate of interest than is usually thought. Moreover, we show that the adherence to the additive life cycle model introduced by Yaari (1965) may lead to significantly overstimating the welfare gains due to mortality risk reduction.

Suggested Citation

  • Antoine Bommier, 2008. "Rational Impatience ?," Working Papers hal-00441880, HAL.
    • Handle: RePEc:hal:wpaper:hal-00441880
    Note: View the original document on HAL open archive server: https://hal.science/hal-00441880
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    References listed on IDEAS

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    Cited by:

    1. Bommier, Antoine & Leroux, Marie-Louise & Lozachmeur, Jean-Marie, 2011. "On the public economics of annuities with differential mortality," Journal of Public Economics, Elsevier, vol. 95(7), pages 612-623.
    2. dʼAlbis, Hippolyte & Lau, Sau-Him Paul & Sánchez-Romero, Miguel, 2012. "Mortality transition and differential incentives for early retirement," Journal of Economic Theory, Elsevier, vol. 147(1), pages 261-283.
    3. Ryan Edwards, 2013. "The cost of uncertain life span," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1485-1522, October.
    4. Antoine Bommier, 2013. "Life-Cycle Preferences Revisited," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1290-1319, December.
    5. Bommier, Antoine, 2009. "Mortality Decline and Aggregate Wealth Accumulation," TSE Working Papers 09-050, Toulouse School of Economics (TSE).

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