TY  - JOUR
AU  - Hurd,Michael D.
TI  - Mortality Risk and Consumption by Couples
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7048
PY  - 1999
Y2  - March 1999
UR  - http://www.nber.org/papers/w7048
L1  - http://www.nber.org/papers/w7048.pdf
N1  - Author contact info:
Michael D. Hurd
RAND Corporation
1776 Main Street
Santa Monica, CA 90407
Tel: 310/451-6945
Fax: 310/451-6923
E-Mail: mhurd@rand.org
AB  - This paper proposes and analyzes a life-cycle model of consumption by couples.  The model is considerably more complicated than the standard model for singles because it has to account for the welfare of a surviving spouse.  The determinants of consumption are the survival paths of each spouse, bequeathable wealth, the flow of annuities both before and after the death of one of the spouses, a motive for bequeathing at the death of the surviving spouse, and the parameters of the utility functions of the couple and of each spouse if widowed.  The analysis shows how consumption and the rate of change of bequeathable wealth react to variations in these determinants, and it compares the consumption level of a single person to a couple.  Summaries of wealth change and consumption in panel data are given which offer general support for the life-cycle model.
ER  -