TY - JOUR T1 - Optimal financial knowledge and wealth inequality JF - The Journal of Political Economy Y1 - 2017 A1 - Annamaria Lusardi A1 - Pierre-Carl Michaud A1 - Olivia S. Mitchell KW - Financial literacy KW - Retirement Planning and Satisfaction KW - Wealth AB - We show that financial knowledge is a key determinant of wealth inequality in a stochastic lifecycle model with endogenous financial knowledge accumulation, where financial knowledge enables individuals to better allocate lifetime resources in a world of uncertainty and imperfect insurance. Moreover, because of how the U.S. social insurance system works, better-educated individuals have most to gain from investing in financial knowledge. Our parsimonious specification generates substantial wealth inequality relative to a one-asset saving model and one where returns on wealth depend on portfolio composition alone. We estimate that 30-40 percent of retirement wealth inequality is accounted for by financial knowledge. VL - 125 IS - 2 U1 - http://www.ncbi.nlm.nih.gov/pubmed/28555088?dopt=Abstract ER - TY - RPRT T1 - Optimal Financial Knowledge and Wealth Inequality Y1 - 2013 A1 - Annamaria Lusardi A1 - Pierre-Carl Michaud A1 - Olivia S. Mitchell KW - Financial literacy KW - Older Adults KW - Wealth Inequality KW - Women and Minorities AB - While financial knowledge is strongly positively related to household wealth, there is also considerable cross-sectional variation in both financial knowledge and net asset levels. To explore these patterns, we develop a calibrated stochastic life cycle model featuring endogenous financial knowledge accumulation. The model generates substantial wealth inequality, over and above that of standard life cycle models; this is because higher earners typically have more hump-shaped labor income profiles and lower retirement benefits which, when interacted with precautionary saving motives, boost their need for private wealth accumulation and thus financial knowledge. Our simulations show that endogenous financial knowledge accumulation has the potential to account for a large proportion of wealth inequality. The fraction of the population which is rationally financially "ignorant" depends on the generosity of the retirement system and the level of means-tested benefits. Educational efforts to enhance financial savvy early in the life cycle so as to produce one percentage point excess return per year would be valued highly by people in all educational groups. JF - NBER Working Paper Series PB - National Bureau of Economic Research CY - Cambridge, MA UR - http://www.nber.org/papers/w18669.pdf ER - TY - JOUR T1 - Differences in health between Americans and Western Europeans: Effects on longevity and public finance. JF - Soc Sci Med Y1 - 2011 A1 - Pierre-Carl Michaud A1 - Dana P Goldman A1 - Darius Lakdawalla A1 - Adam Gailey A1 - Yuhui Zheng KW - Activities of Daily Living KW - Adult KW - Aged KW - Body Mass Index KW - Cross-Cultural Comparison KW - Disabled Persons KW - Europe KW - Female KW - Health Expenditures KW - health policy KW - Health Status Disparities KW - Health Surveys KW - Humans KW - Internationality KW - Life Expectancy KW - Male KW - Middle Aged KW - Models, Economic KW - Models, Statistical KW - Mortality KW - Public Health KW - United States AB -

In 1975, 50-year-old Americans could expect to live slightly longer than most of their Western European counterparts. By 2005, American life expectancy had fallen behind that of most Western European countries. We find that this growing longevity gap is primarily due to real declines in the health of near-elderly Americans, relative to their Western European peers. We use a microsimulation approach to project what US longevity would look like, if US health trends approximated those in Western Europe. The model implies that differences in health can explain most of the growing gap in remaining life expectancy. In addition, we quantify the public finance consequences of this deterioration in health. The model predicts that gradually moving American cohorts to the health status enjoyed by Western Europeans could save up to $1.1 trillion in discounted total health expenditures from 2004 to 2050.

PB - 73 VL - 73 IS - 2 U1 - http://www.ncbi.nlm.nih.gov/pubmed/21719178?dopt=Abstract U2 - PMC3383030 U4 - disability/disability/mortality/international comparisons/Cross-national/microsimulation/Europe/SHARE/ELSA_/longevity ER - TY - JOUR T1 - The fiscal consequences of trends in population health.(Forum: America's Looming Fiscal Crisis) JF - National Tax Journal Y1 - 2010 A1 - Dana P Goldman A1 - Pierre-Carl Michaud A1 - Darius Lakdawalla A1 - Yuhui Zheng A1 - Adam Gailey A1 - Vaynman, Igor KW - Medicare/Medicaid/Health Insurance KW - Other KW - Public Policy AB - The public burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy--with a concomitant decrease in the public sector's annuity burden--but these savings may be offset by worsening functional status which increases health care spending, reduces labor supply, and increases public assistance. Using a health microsimulation model we quantify the competing public finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures. We find that the trends in obesity and smoking have different fiscal consequences and that, because of its more profound effects on morbidity and health care expenditures, obesity represents a larger immediate risk from a fiscal perspective. Uncertainty in residual mortality improvements represents by far the largest risk. Keywords: disability, health care costs, social security, microsimulation JEL Codes: 110, 138, J26 PB - 63 VL - 63 IS - 2 N1 - Magazine/Journal Academic OneFile Gale 2011/02/17 COPYRIGHT 2010 National Tax Association U4 - Influence/Research/Public finance_Influence/Public health_Research/Medical care, Cost of_Research ER - TY - RPRT T1 - Health and Access Effects of New Drugs: Combining Experimental and Non-Experimental Data Y1 - 2010 A1 - Pierre-Carl Michaud A1 - Darius Lakdawalla A1 - Dana P Goldman A1 - Sood, Neeraj A1 - Cong, Ze KW - Health Conditions and Status KW - Healthcare KW - Methodology KW - Other AB - We propose to combine clinical trial and estimates of behavioral responses in the population to quantify the value of new drug innovations when such values cannot be obtained by randomized experiments alone. New drugs are seen as having two distinct effects on patients. First, they can provide better outcomes for patients currently under treatment, due to better clinical efficacy. Second, they can also provide treatment access to more patients, perhaps by reducing side effects or expanding treatment. We compare these clinical and access effects using claims data, data on the arrival rate of new drugs, and the clinical trials literature on the effectiveness of these drugs. We find that the effect of new drug introductions on the number of patients treated accounts for a substantial majority of the value created by new drugs. UR - https://depot.erudit.org/bitstream/003241dd/1/CIRPEE10-38.pdf U4 - Pharmaceutical innovation/effectiveness/cost-benefit analysis/cancer ER - TY - RPRT T1 - International Differences in Longevity and Health and Their Economic Consequences Y1 - 2009 A1 - Pierre-Carl Michaud A1 - Dana P Goldman A1 - Darius Lakdawalla A1 - Adam Gailey A1 - Yuhui Zheng KW - Cross-National KW - Health Conditions and Status KW - Healthcare KW - Medicare/Medicaid/Health Insurance KW - Public Policy AB - In 1975, 50 year-old Americans could expect to live slightly longer than their European counterparts. By 2005, American life expectancy at that age has diverged substantially compared to Europe. We find that this growing longevity gap is primarily the symptom of real declines in the health of near-elderly Americans, relative to their European peers. In particular, we use a microsimulation approach to project what US longevity would look like, if US health trends approximated those in Europe. We find that differences in health can explain most of the growing gap in remaining life expectancy. In addition, we quantify the public finance consequences of this deterioration in health. The model predicts that gradually moving American cohorts to the health status enjoyed by Europeans could save up to 1.1 trillion in discounted total health expenditures from 2004 to 2050. JF - NBER Working Paper PB - The National Bureau of Economic Research CY - Cambridge, MA U4 - SHARE/Public Policy/health Care/Medicare/Longevity ER - TY - RPRT T1 - Understanding the Economic Consequences of Shifting Trends in Population Health Y1 - 2009 A1 - Dana P Goldman A1 - Darius Lakdawalla A1 - Pierre-Carl Michaud A1 - Yuhui Zheng A1 - Adam Gailey KW - Employment and Labor Force KW - Expectations KW - Health Conditions and Status KW - Healthcare KW - Methodology KW - Public Policy AB - The public economic burden of shifting trends in population health remains uncertain. Sustained increases in obesity, diabetes, and other diseases could reduce life expectancy - with a concomitant decrease in the public-sector's annuity burden - but these savings may be offset by worsening functional status, which increases health care spending, reduces labor supply, and increases public assistance. Using a microsimulation approach, we quantify the competing public-finance consequences of shifting trends in population health for medical care costs, labor supply, earnings, wealth, tax revenues, and government expenditures (including Social Security and income assistance). Together, the reduction in smoking and the rise in obesity have increased net public-sector liabilities by $430bn, or approximately 4% of the current debt burden. Larger effects are observed for specific public programs: annual spending is 10% higher in the Medicaid program, and 7% higher for Medicare. JF - NBER Working Paper PB - National Bureau of Economic Research CY - Cambridge, MA U4 - Cross Cultural Comparison/life Expectancy/Functional Status/health care spending/public assistance/labor Supply/government expenditures ER - TY - JOUR T1 - U.S. Pharmaceutical Policy In A Global Marketplace JF - Health Affairs Y1 - 2009 A1 - Darius Lakdawalla A1 - Dana P Goldman A1 - Pierre-Carl Michaud A1 - Sood, Neeraj A1 - Lempert, Robert A1 - Cong, Ze A1 - de Vries, Han A1 - Italo Gutierrez KW - Healthcare AB - U.S. consumers generate more pharmaceutical revenue per person than Europeans do. This has led some U.S. policymakers to call for limits on U.S. pharmaceutical spending and prices. Using a microsimulation approach, we analyze the welfare impacts of lowering U.S. prices toward European levels, and how these impacts vary with key modeling assumptions. Under the assumptions most favorable to them, price controls generate modest benefits (a few thousand dollars per person). However, for the remainder of plausible assumptions, price controls generate costs that are an order of magnitude higher. In contrast, publicly financing reductions in consumer prices, without affecting manufacturer prices, delivers benefits in virtually all plausible cases. PB - 28 VL - 28 IS - 1 U4 - pharmaceutical spending ER -