Optimal Aging and Death: Understanding the Preston Curve

Dalgaard, Carl‐Johan; Strulik, Holger

doi:10.1111/jeea.12071

Cited by 137 publications

(78 citation statements)

References 54 publications

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“…Consumption can be healthy (∂ d /∂ C h ≤ 0) or unhealthy (∂ d /∂ C u > 0). Health deterioration is a general function of health ( d [ H ( t )]), as opposed to the standard assumption that it is proportional to the health stock ( d [ H ( t )] ∝ H ( t )) as in Grossman (1972) and most of the subsequent health-capital literature (for an exception, see Dalgaard and Strulik, 2014). …”

Section: A Theory Of Wealth Health and Unhealthy Consumptionmentioning

confidence: 99%

Wealth and health behavior: Testing the concept of a health cost

Kippersluis

Galama

2014

European Economic Review

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Wealthier individuals engage in healthier behavior. This paper seeks to explain this phenomenon by exploiting both inheritances and lottery winnings to test a theory of health behavior. We distinguish between the direct monetary cost and the indirect health cost (value of health lost) of unhealthy consumption. The health cost increases with wealth and the degree of unhealthiness, leading wealthier individuals to consume more healthy and moderately unhealthy, but fewer severely unhealthy goods. The empirical evidence presented suggests that differences in health costs may indeed partially explain behavioral differences, and ultimately health outcomes, between wealth groups.

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Section: A Theory Of Wealth Health and Unhealthy Consumptionmentioning

confidence: 99%

Wealth and health behavior: Testing the concept of a health cost

Kippersluis

Galama

2014

European Economic Review

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“…(). Dalgaard and Strulik () demonstrate that the reverse mechanism, that is the influence of income on health, explains a large part of the positive cross‐country correlations between life expectancy and GDP per capita . See also Weil () for a comprehensive overview of the literature.…”

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confidence: 99%

The Rise in Life Expectancy and Economic Growth in the 20th Century

Hansen

Lønstrup

2015

The Economic Journal

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This research exploits conditional exogenous variation in mortality from the diffusion of modern medicine to study the effect of growth in life expectancy on the growth in GDP per capita. The empirical analysis establishes that countries that obtained higher growth rates of life expectancy due to this shock to mortality in the mid-twentieth century experienced lower growth rates of GDP per capita in the second half of the twentieth century. In addition, a negative relationship between initial level of life expectancy and the subsequent growth rate of GDP per capita is found.How did the unprecedented rise in life expectancy during the second half of the 20th century affect the economic development of nations? Relying on cross-country variation, the most studies find positive correlations between life expectancy and income. 1 In contrast to these studies, Acemoglu and Johnson (2007), henceforth AJ, exploit exogenous sources of within-country variations in life expectancy due to the diffusion of modern medicine from the 1950s onward and find a negative effect of the level of life expectancy on the level of GDP per capita.This article asks the question: How do the level and the growth rate of life expectancy affect the growth rate of GDP per capita? To answer this question, we extend the data set used by AJ with data on the variables of interest in 1900. These extra observations enable us to obtain growth rates of life expectancy and GDP per capita for two periods. Having two observations on growth rates allows us to control for unobserved country fixed effects which we show is crucial for the results. We follow AJ by using the potential treatment of 15 infectious diseases as an instrument for the growth rate of life expectancy. We show that this instrumental variable, which follows the same logic as a differences-in-differences estimator with continuous treatment, has strong predictive power for the growth rate of life expectancy even conditionally on initial life expectancy.The empirical analysis establishes that the growth rate of life expectancy had a negative impact on the growth rate of GDP per capita. This finding is robust to controlling for initial life expectancy and economic conditions as measured by log life demonstrate that the reverse mechanism, that is the influence of income on health, explains a large part of the positive cross-country correlations between life expectancy and GDP per capita. See also Weil (2014) for a comprehensive overview of the literature.

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“…Finally, in economics, the health deficit approach has been almost exclusively employed to analyze life‐cycle decisions of a single agent (Dalgaard and Strulik, ; Schuenemann et al ., 2017a, 2017b; Strulik, ) . In this paper, we examine economy‐wide interactions of health spending and endogenous longevity with the pension system, and its implications for health inequality.…”

Section: Introductionmentioning

confidence: 99%

Optimal Social Insurance and Health Inequality

Grossmann

Strulik

2019

German Economic Review

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This paper integrates into public economics a biologically founded, stochastic process of individual aging. The novel approach enables us to quantitatively characterize the optimal joint design of health and retirement policy behind the veil of ignorance for today and in response to future medical progress. Calibrating our model to Germany, our analysis suggests that the current social insurance policy instruments are set close to the (constrained) socially optimal levels, given proportional contribution rates for health and pension finance, the equivalence principle in the pension system, and a common statutory retirement age. Future progress in medical technology calls for a potentially drastic increase in health spending and a higher retirement age without lowering the pension contribution rate. Interestingly, from an ex ante point of view, medical progress and higher health spending are in conflict with the goal to reduce health inequality.

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Optimal Aging and Death: Understanding the Preston Curve

Cited by 137 publications

References 54 publications

Wealth and health behavior: Testing the concept of a health cost

Wealth and health behavior: Testing the concept of a health cost

The Rise in Life Expectancy and Economic Growth in the 20th Century

Optimal Social Insurance and Health Inequality

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