Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.
Terms of use:
Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. licence. www.econstor.eu Life-cycle consumption patterns at older ages in the US and the UK: can medical expenditures explain the difference?
If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated
IFS Working Paper W15/12James Banks Richard Blundell Peter Levell James P. SmithThe Institute for Fiscal Studies (IFS) is an independent research institute whose remit is to carry out rigorous economic research into public policy and to disseminate the findings of this research. IFS receives generous support from the Economic and Social Research Council, in particular via the ESRC Centre for the Microeconomic Analysis of Public Policy (CPP). The content of our working papers is the work of their authors and does not necessarily represent the views of IFS research staff or affiliates. What can explain a difference of this magnitude? An obvious starting point is to examine age paths of income to access the extent to which consumption expenditures are tracking age paths in household income. But the second panel in Figure 1, which plots cohort averaged paths of household income at older ages in the two countries, demonstrates that income declines at very similar rates at older ages in the two countries so that this seems unlikely to be the major reason. In this paper we investigate other possible reasons that may explain the dramatically different patterns of nondurable consumption of older ages in the two countries by investigating differences in both inter and intra-temporal consumption for households around and beyond retirement age. The set of factors that we explore in this paper include: differential cohort effects in the two countries that may distort average life-cycle age profiles, differences in the timing of retirement in the presence of separabilities with employment, differential paths of housing expenditures possibly driven by institutional differences in housing markets between countries, level and path differences in health status and mortality, and finally levels and volatility of medical spending in the US as deteriorat...