TY  - JOUR
AU  - Kopczuk,Wojciech
AU  - Slemrod,Joel
TI  - Denial of Death and Economic Behavior
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11485
PY  - 2005
Y2  - July 2005
UR  - http://www.nber.org/papers/w11485
L1  - http://www.nber.org/papers/w11485.pdf
N1  - Author contact info:
Wojciech Kopczuk
Columbia University
420 West 118th Street, Rm. 1022 IAB
MC 3323
New York, NY  10027
Tel: 212/854-2519
Fax: 212/864-8059
E-Mail: wk2110@columbia.edu

Joel Slemrod
University of Michigan Business School
701 Tappan Street
Room R5396
Ann Arbor, MI  48109-1234
Tel: 734/936-3914
Fax: 734-615-4323
E-Mail: jslemrod@umich.edu
AB  - We model denial of death and its effect on economic behavior. Attempts to reduce death anxiety and the possibility of denial of mortality-relevant information interact with intertemporal choices and may lead to time-inconsistent behavior and other "behavioral" phenomena. In the model, repression of signals of mortality leads to underconsumption for unsophisticated individuals, but forward-sophisticated individuals may over-consume in anticipation of future denial and may seek ways to commit to act according to one's mortality prospects as currently perceived. We show that the mere possibility of engaging in this kind of denial leads to time-inconsistent but efficient behavior.  Refusal to face up to the reality of death may help explain a wide range of empirical phenomena, including the underutilization of tax-advanced inter vivos gifts and inadequate purchase of life insurance.
ER  -