Health and Wealth in a Life-Cycle Model

TitleHealth and Wealth in a Life-Cycle Model
Publication TypeReport
Year of Publication2010
AuthorsScholz, JKarl, Seshadri, A
InstitutionThe University of Michigan, Michigan Retirement Research Center
KeywordsConsumption and Savings, Event History/Life Cycle, Health Conditions and Status, Healthcare, Medicare/Medicaid/Health Insurance, Net Worth and Assets

This paper presents a preliminary model of health investments over the life cycle. Health affects both longevity and provides flow utility. We analyze the interplay between consumption choices and investments in health by solving each household s dynamic optimization problem to obtain predictions on health investments and consumption choices over the lifecycle. Our preliminary model does a good job of matching the distribution of medical expenses across households in the sample. We illustrate the scope of future model applications by examining the effects of a stylized Medicare program on patterns of wealth and mortality.

Endnote Keywords

life Cycle/consumption/health investments/Medical Expenditures/wealth/mortality

Endnote ID


Citation Key5807