Life Insurance and Household Consumption
American Economic Review
vol. 102,
no. 7, December 2012
(pp. 3701-30)
Abstract
Using life insurance holdings by age, sex, and marital status, we infer how individuals value consumption in different demographic stages. We estimate equivalence scales and bequest motives simultaneously within a fully specified model where agents face US demographics and save and purchase life insurance. Our findings indicate that individuals are very caring for dependents, that economies of scale are large, that children are very costly (or yield very high marginal utility), that wives with children produce lots of home goods, and that females display habits from marriage, while men do not. These findings contrast sharply with standard equivalence scales.Citation
Hong, Jay H., and José-Víctor Ríos-Rull. 2012. "Life Insurance and Household Consumption." American Economic Review, 102 (7): 3701-30. DOI: 10.1257/aer.102.7.3701Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D14 Personal Finance
- D64 Altruism; Philanthropy
- D15 Intertemporal Consumer Choice; Life Cycle Models and Saving
- E21 Macroeconomics: Consumption; Saving; Wealth
- G22 Insurance; Insurance Companies