TY  - JOUR
AU  - Nardi,Mariacristina De
AU  - French,Eric
AU  - Jones,John Bailey
TI  - Differential Mortality, Uncertain Medical Expenses, and the Saving of Elderly Singles
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12554
PY  - 2006
Y2  - October 2006
UR  - http://www.nber.org/papers/w12554
L1  - http://www.nber.org/papers/w12554.pdf
N1  - Author contact info:
Mariacristina De Nardi
Federal Reserve Bank of Chicago
230 South LaSalle St.
Chicago, IL 60604
Tel: 312/322-5769
Fax: 312/322-2357
E-Mail: denardim@nber.org

Eric French
Research Department
Federal Reserve Bank of Chicago
230 South LaSalle Street
Chicago, IL  60604
E-Mail: efrench@frbchi.org

John Bailey Jones
Department of Economics
BA-113B
University at Albany
State University of New York
Albany, NY 12222
Tel: 518/442-4926
E-Mail: jbjones@albany.edu
M3  - presented at "SI 2006 EFG Working Group (EFACR)", July 17-21, 2006
AB  - People have heterogenous life expectancies: women live longer than men, rich people live longer than poor people, and healthy people live longer than sick people. People are also subject to heterogenous out-of-pocket medical expense risk.  We construct a rich structural model of saving behavior for retired single households that accounts for this heterogeneity, and we estimate the model using AHEAD data and the method of simulated moments. We find that the risk of living long and facing high medical expenses goes a long way toward explaining the elderly's savings decisions. Specifically, medical expenses that rise quickly with both age and permanent income can explain why the elderly singles, and especially the richest ones, run down their assets so slowly. We also find that social insurance has a big impact on the elderly's savings.


ER  -