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The Influence of Public Policy on Health, Wealth and Mortality

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  • John Karl Scholz

    (University of Wisconsin)

  • Ananth Seshadri

    (University of Wisconsin)

Abstract

In this project we extend an augmented lifecycle model, incorporating a Grossman-style model of health capital, to enhance understanding of factors influencing consumption, wealth and health. We develop three primary results when using the model to explore the effects of stylized versions of Medicare and Social Security on wealth and longevity. First, our model calibration implies consumption and health are complements. As health depreciates with age, households will get less utility from consumption than would be in the case of a lifecycle model that does not endogenize health. Second, it appears that forward-looking households, when confronted by a substantially reduced safety net, will respond by reducing consumption and by reducing their health investment and therefore longevity. Third, there is a potentially important difference between short- and long- run responses to policy.

Suggested Citation

  • John Karl Scholz & Ananth Seshadri, 2011. "The Influence of Public Policy on Health, Wealth and Mortality," Working Papers wp252, University of Michigan, Michigan Retirement Research Center.
    • Handle: RePEc:mrr:papers:wp252
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Influence of Public Policy on Health, Wealth and Mortality
      by Christian Zimmermann in NEP-DGE blog on 2011-12-06 09:55:23
    2. The Influence of Public Policy on Health, Wealth and Mortality
      by Christian Zimmermann in NEP-DGE blog on 2011-12-06 09:55:23

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