Life Expectancy and Old Age Savings
(with Mariacristina De Nardi and Eric French)
American Economic Review, Papers & Proceedings 99(2), 110-115 (Also NBER Working Paper 14653)
May, 2009
Abstract. Rich people, women, and healthy people live longer. We document that this heterogeneity in life expectancy is large, and we use an estimated structural model to assess its effect on the elderly's saving. We find that the differences in life expectancy related to observable factors such as income, gender, and health have large effects on savings, and that these factors contribute by similar amounts. We also show that the risk of outliving one's expected lifespan has a large effect on the elderly's saving behavior.