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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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    1. repec:fip:fedreq:00060 is not listed on IDEAS
    2. repec:eee:dyncon:v:84:y:2017:i:c:p:58-76 is not listed on IDEAS
    3. Timm Bönke & Markus Grabka & Carsten Schröder & Edward N. Wolff, 2017. "A Head-to-Head Comparison of Augmented Wealth in Germany and the United States," NBER Working Papers 23244, National Bureau of Economic Research, Inc.
    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. Jones, John Bailey & De Nardi, Mariacristina & French, Eric & McGee, Rory & Kirschner, Justin, 2018. "The Lifetime Medical Spending of Retirees," Economic Quarterly, Federal Reserve Bank of Richmond, issue 3Q, pages 103-135.
    7. repec:red:issued:18-121 is not listed on IDEAS
    8. Davide Dragone & Holger Strulik, 2018. "Negligible Senescence: An Economic Life Cycle Model for the Future," CESifo Working Paper Series 7246, CESifo Group Munich.
    9. 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.
    10. 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.

    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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