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THE HEALTH HUMP

Published online by Cambridge University Press:  08 May 2017

Holger Strulik
Holger Strulik*
Affiliation:
University of Goettingen
*
Address correspondence to: Holger Strulik, University of Goettingen, Department of Economics, Platz der Goettinger Sieben 3, 37073 Goettingen, Germany; e-mail: [email protected].
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Abstract

In this paper, I suggest a novel explanation for a hump-shaped age-consumption profile, based on human aging. The model integrates health in the utility function and utilizes recent estimates of the effects of health on the marginal utility of consumption. The parsimonious model has a closed-form solution for the age of peak consumption and the consumption level at that age relative to initial consumption. A calibration of the model with data from gerontology produces an empirically plausible hump in consumption.

Keywords

life-cycle consumptionhealthagingD91E21I10
Type
Shorter Paper
Information
Journal of Demographic Economics , Volume 83 , Issue 2 , June 2017 , pp. 245 - 258
Copyright
Copyright © Université catholique de Louvain 2017 

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Footnotes

I would like to thank Carl-Johan Dalgaard, Mette Ejrnaes, Sophia Kan, Timo Trimborn, and two anonymous referees for helpful comments.

References

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