The Influence of Public Policy on Health, Wealth and Mortality

TitleThe Influence of Public Policy on Health, Wealth and Mortality
Publication TypeReport
Year of Publication2011
AuthorsScholz, JKarl, Seshadri, A
Series TitleMichigan Retirement and Disability Research Center Project
Document NumberUM11-12
InstitutionThe University of Michigan
CityAnn Arbor, MI
KeywordsConsumption and Savings, Event History/Life Cycle, Health Conditions and Status, Net Worth and Assets, Public Policy

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.

Endnote Keywords

life-cycle/health capital/health capital/consumption/Public Policy/household spending/household spending

Endnote ID


Citation Key5915