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Life-Cycle Consumption Patterns at Older Ages in the US and the UK Can Medical Expenditures Explain the Difference?

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Listed:
  • James Banks
  • Richard Blundell
  • Peter Levell
  • James P. Smith

Abstract

Our data indicate significantly steeper declines in nondurable expenditures in the UK compared to the US in spite of income paths at older ages exhibiting similar declines. We examine several possible causes, including different employment paths, housing ownership and expenses, levels and paths of health status, and out-of -pocket medical expenditures. Among all the factors we considered, we find that differences in levels, age paths, and uncertainty in medical expenses is the most likely reason for the steeper declines in nondurable expenses in the US compared to the UK.

Suggested Citation

  • James Banks & Richard Blundell & Peter Levell & James P. Smith, 2015. "Life-Cycle Consumption Patterns at Older Ages in the US and the UK Can Medical Expenditures Explain the Difference?," Working Papers WR-1100, RAND Corporation.
  • Handle: RePEc:ran:wpaper:wr-1100
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Life-Cycle Consumption Patterns at Older Ages in the US and the UK: Can Medical Expenditures Explain the Difference?
      by maximorossi in NEP-LTV blog on 2016-09-06 01:14:41

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    Cited by:

    1. Fernando Alexandre & Pedro Bação & Miguel Portela, 2019. "A flatter life-cycle consumption profile," NIPE Working Papers 01/2019, NIPE - Universidade do Minho.
    2. John Bailey Jones & Aaron Steelman, 2019. "Lifetime Medical Spending of Retirees," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, issue May.
    3. Huang, H. & Milevsky, M.A. & Salisbury, T.S., 2017. "Retirement spending and biological age," Journal of Economic Dynamics and Control, Elsevier, vol. 84(C), pages 58-76.
    4. Mariacristina De Nardi & Eric French & John Bailey Jones, 2016. "Medicaid Insurance in Old Age," American Economic Review, American Economic Association, vol. 106(11), pages 3480-3520, November.
    5. Huaxiong Huang & Moshe A. Milevsky & Thomas S. Salisbury, 2018. "Retirement spending and biological age," Papers 1811.09921, arXiv.org.
    6. Timm Bönke & Markus M. Grabka & Carsten Schröder & Edward N. Wolff, 2020. "A Head‐to‐Head Comparison of Augmented Wealth in Germany and the United States," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(3), pages 1140-1180, July.
    7. Christian Dudel & Julian Schmied, 2019. "Pension adequacy standards: an empirical estimation strategy and results for the United States and Germany," MPIDR Working Papers WP-2019-003, Max Planck Institute for Demographic Research, Rostock, Germany.
    8. Pietro Reichlin, 2019. "Equilibrium indeterminacy with parental altruism," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 24-35, January.
    9. Dragone, Davide & Strulik, Holger, 2020. "Negligible senescence: An economic life cycle model for the future," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 264-285.
    10. Kools, Lieke & Knoef, Marike, 2019. "Health and consumption preferences; estimating the health state dependence of utility using equivalence scales," European Economic Review, Elsevier, vol. 113(C), pages 46-62.
    11. Hugonnier, J. & Pelgrin, F. & St-Amour, P., 2016. "Closing Down the Shop: Optimal Health and Wealth Dynamics near the End of Life," Health, Econometrics and Data Group (HEDG) Working Papers 16/28, HEDG, c/o Department of Economics, University of York.
    12. Fernando Alexandre & Pedro Bação & Miguel Portela, 2020. "Is the basic life-cycle theory of consumption becoming more relevant? Evidence from Portugal," Review of Economics of the Household, Springer, vol. 18(1), pages 93-116, March.
    13. Julien Hugonnier & Florian Pelgrin & Pascal St-Amour, 2017. "Closing Down the Shop: Optimal Health and Wealth Dynamics Near the End of Life," Swiss Finance Institute Research Paper Series 17-11, Swiss Finance Institute, revised May 2018.

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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