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The Effects of Health Insurance and Self-Insurance on Retirement Behavior

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  • Eric French and John Jones

Abstract

\tThis paper presents and estimates a dynamic programming model model of retirement behavior that accounts explicitly for the effects of health cost volatility and and health insurance on retirement behavior. The model includes a savings decision so that we are able to analyze whether self-insurance is an important mechanism for understanding how greatly individuals value health insurance. We present preliminary estimates from the Health and Retirement Survey. We find that the possibility of self-insurance significantly lessens an individual's valuation of health insurance. Therefore, failure to account for self-insurance potentially leads to overestimates of the effect of health insurance and Medicare on retirement behavior.

Suggested Citation

  • Eric French and John Jones, 2001. "The Effects of Health Insurance and Self-Insurance on Retirement Behavior," Computing in Economics and Finance 2001 24, Society for Computational Economics.
  • Handle: RePEc:sce:scecf1:24
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    Keywords

    health insurance; retirement;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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