American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Life-Cycle Consumption Patterns at Older Ages in the United States and the United Kingdom: Can Medical Expenditures Explain the Difference?
American Economic Journal: Economic Policy
(pp. 27–54)
Abstract
This paper documents significantly steeper declines in nondurable expenditures at older ages in the United Kingdom compared to the United States, in spite of income paths being similar. Several possible causes are explored, including different employment paths, housing ownership and expenses, levels and paths of health status, number of household members, and out-of-pocket medical expenditures. Among all the potential explanations considered, those relating to health care—differences in levels and age paths in medical expenses and medical expenditure risk—can fully account for the steeper declines in nondurable consumption in the United Kingdom compared to the United States.Citation
Banks, James, Richard Blundell, Peter Levell, and James P. Smith. 2019. "Life-Cycle Consumption Patterns at Older Ages in the United States and the United Kingdom: Can Medical Expenditures Explain the Difference?" American Economic Journal: Economic Policy 11 (3): 27–54. DOI: 10.1257/pol.20170182Additional Materials
JEL Classification
- D14 Household Saving; Personal Finance
- D15 Intertemporal Household Choice; Life Cycle Models and Saving
- I11 Analysis of Health Care Markets
- J14 Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination