a theory of socio economic disparities in health over the life cycle motivated by the observation that medical care explains only a relatively small part of the ses health gradient we present a life cycle model that incorporates several additional behaviours that potentially explain jointly a large part of observed disparities as a result the model provides not only a conceptual framework for the ses health gradient but more generally an improved framework for the production of health we derive novel predictions from the theory by performing comparative dynamic analyses more generally our comparative dynamic method can be applied to models of similar form e g human capital health deficits firm investment to name a few

explaining cross country differences in participation rates and aggregate fluctuations abstract the empirical evidence shows that there exists a negative relationship between the ratio of employment to population and the standard deviation of log of gdp in this paper we build a real business cycle model with an underground economy sector in order to quantitatively address this issue the existence of an alternative to registered market activities for providing tradeable goods and services implies that population will be switching sectors in response to aggregate productivity shocks amplifying the response of registered output the level of participation in registered market activities will then be negatively related to fluctuations this feature does not arise in a standard one sector model

comparative dynamics in a health investment model the method of comparative dynamics fully exploits the inter temporal structure of optimal control models i derive comparative dynamic results in a simplified demand for health model the effect of a change in the depreciation rate on the optimal paths for health capital and investment in health is studied by use of a phase diagram

a theory of voting equilibria a voting equilibrium arises when the voters in an electorate acting in accordance with both their preferences for the candidates and their perceptions of the relative chances of various pairs of candidates being in contention for victory generate an election result that justifies their perceptions voting equilibria always exist and the set of equilibria can vary substantially with the choice of voting system we compare equilibria under the plurality rule approval voting and the borda system we consider a candidate positioning game and find that the plurality rule imposes little restriction on the position of the winning candidate in three candidate races while approval voting leads to a winner positioned at the median of the voter distribution we contrast campaign activities intended to influence voter preferences with activities meant to influence only perceptions of candidate viability

an economic analysis of murder and accident risks for police in the united states the idea that us police are at great risk in their jobs is examined it is found that their risk of being murdered is actually less than for other people of the same age and sex us police are however at modestly higher risk of accidental death than are other workers a four equation model including supply demand accident risk and homicide risk is estimated and it is found that police are able to influence the accident and homicide risks they face and do affect these risks in response to salary received

optimal aging and death understanding the preston curve does prosperity lead to greater longevity if so what is the strength of the income channel to address these questions we develop a life cycle model in which households are subject to physiological aging in modeling aging we draw on recent research in the elds of biology and medicine the speed of the aging process and thus the time of death are endogenously determined by optimal health investments a calibrated version of the model accounts well for the observed non linear cross country link between longevity and income also known as the preston curve

an equilibrium model of the business cycle with household production and fiscal policy the authors estimate a dynamic general equilibrium model of the u s economy that includes an explicit household production sector and stochastic fiscal variables they use their estimates to investigate two issues first the authors analyze how well the model accounts for aggregate fluctuations they find that household production has a significant impact and reject a nested specification in which changes in the home production technology do not matter for market variables second the authors study the effects of some simple fiscal policy experiments and show that the model generates different predictions for the effects of tax changes than similar models without home production copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

a dynamic efficiency rationale for public investment in the health of the young in this paper we assume away standard distributional and static efficiency arguments for public health and instead seek a dynamic efficiency rationale we study a lifecycle model wherein young agents make health investments to reduce mortality risk we identify a welfare rationale for public health under dynamic efficiency and exogenous mortality even when private and public investments are perfect substitutes if health investment reduces mortality risk but individuals do not internalize its effect on the life annuity interest rate the philipson becker effect emerges when the young are net borrowers this works together with dynamic efficiency to support a role for public health resume raisons fondees sur l efficience dynamique pour l investissement public dans la sante des jeunes dans ce memoire on met de cote les arguments conventionnels de sante publique fondes sur la repartition des revenus et l efficience statique pour s interesser a explorer les raisons d efficience dynamique pour ce genre d investissement on etudie un modele de cycle de vie ou les jeunes agents font des investissements en soins de sante pour reduire le risque de mortalite on identifie un raisonnement en termes de bien etre en faveur de depenses en sante publique quand il y a efficience dynamique et mortalite exogene meme quand les investissements prives et publics sont de parfaits substituts si l investissement en soins de sante reduit le risque de mortalite mais que les individus n internalisent pas ses effets sur le taux d interet sur les rentes viageres l effet philipson becker emerge quand les jeunes sont des emprunteurs nets cet effet joue dans le meme sens que l efficience dynamique en faveur d un role pour la sante publique

health education and life cycle savings in the development process this paper studies investment in health and human capital in a life cycle model health investment enhances survival to old age by improving health from its endowed level the model predicts two distinctive phases of development when income is low enough the economy has no health investment and little savings leading to slow growth when income grows health investment will become positive and the saving rate will rise leading to higher life expectancy and faster growth a health subsidy can move the economy from the first phase to the next subsidies on health and human capital investments can improve welfare

interdependency of personal savings and labour force participation of the elderly and social security wealth a time series analysis using japanese annual time series data covering the period 1950 1982 our study shows that social security wealth during this period depressed personal savings as a result there was a reduction of approximately 79000 yen of wealth per capitain real terms from 1960 to 1980 however the declining labour force participation of elderly males brought about for example by earlier retirement stimulated personal savings by an estimated 13000 yen over the same period the results indicate that the benefit effect tends to outweigh the retirement effect furthermore this study has identified a negative interdependency between the level of personal savings and the retirement behaviour of elderly males a typical male worker saves more before retirement if that individual expects to stay a shorter time in the labour market retirement behaviour is less responsive to a change in personal savings behaviour than vice versa

health investment saving and public policy this paper develops an overlapping generations model in which agents invest in health to prolong life in both working and retirement periods it explores how unfunded social security with or without health subsidies affects life expectancy economic growth and welfare in particular by extending life at a possible cost of capital accumulation health subsidies and a pay as you go pension can improve welfare especially in the short run

does informality facilitate inflation stability abstract informality is a structural trait in emerging economies affecting the behavior of labor markets financial access and economy wide productivity this paper develops a simple general equilibrium closed economy model with nominal rigidities labor and financial frictions to analyze the transmission of shocks and of monetary policy in the model the informal sector provides a flexible margin of adjustment to the labor market at the cost of a lower productivity in addition only formal sector firms have access to financing which is instrumental in their production process in a quantitative version of the model calibrated to mexican data we find that informality i dampens the impact of demand and financial shocks as well as of technology shocks specific to the formal sector on wages and inflation but ii heightens the inflationary impact of aggregate technology shocks the presence of an informal sector also increases the sacrifice ratio of monetary policy actions from a central bank perspective the results imply that informality mitigates inflation volatility for most type of shocks but makes monetary policy less effective

socio economic status health and lifestyle abstract the role of lifestyle in mediating the relationship between socio economic characteristics and health has been discussed extensively in the epidemiological and economic literatures previous analyses have not considered a formal framework incorporating unobservable heterogeneity in this paper we develop a simple economic model in which health is determined partially by lifestyle which depends on preferences budget and time constraints and unobservable characteristics we estimate a recursive empirical specification consisting of a health production function and reduced forms for the lifestyle equations using maximum simulated likelihood msl for a multivariate probit mvp model with discrete indicators of lifestyle choices and self assessed health sah on british panel data from the 1984 and 1991 health and lifestyle survey hals we find that sleeping well exercising and not smoking in 1984 have dramatic positive effects on the probability of reporting excellent or good sah in 1991 and that these effects are much larger having accounted for endogeneity the failure of epidemiological analyses to account for unobserved heterogeneity can explain their low estimates of the relevance of lifestyle in the socio economic status health relationship indicators for prudent alcohol consumption and eating breakfast in 1984 are not found to be statistically significant determinants of sah in 1991

analyzing the effects of insuring health risks on the trade off between short run insurance benefits vs long run incentive costs this paper constructs a dynamic model of health insurance to evaluate the short and long run effects of policies that prevent firms from conditioning wages on health conditions of their workers and that prevent health insurance companies from charging individuals with adverse health conditions higher insurance premia our study is motivated by recent us legislation that has tightened regulations on wage discrimination against workers with poorer health status americans with disability act of 2009 ada and ada amendments act of 2008 adaaa and that will prohibit health insurance companies from charging different premiums for workers of different health status starting in 2014 patient protection and affordable care act ppaca in the model a trade off arises between the static gains from better insurance against poor health induced by these policies and their adverse dynamic incentive effects on household efforts to lead a healthy life using household panel data from the psid we estimate and calibrate the model and then use it to evaluate the static and dynamic consequences of no wage discrimination and no prior conditions laws for the evolution of the cross sectional health and consumption distribution of a cohort of households as well as ex ante lifetime utility of a typical member of this cohort in our quantitative analysis we find that although a combination of both policies is effective in providing full consumption insurance period by period it is suboptimal to introduce both policies jointly since such policy innovation induces a more rapid deterioration of the cohort health distribution over time this is due to the fact that combination of both laws severely undermines the incentives to lead healthier lives the resulting negative effects on health outcomes in society more than offset the static gains from better consumption insurance so that expected discounted lifetime utility is lower under both policies relative to only implementing wage nondiscrimination legislation

optimal retirement with increasing longevity we develop an optimizing life cycle model of retirement with perfect capital markets we show that longer healthy life expectancy usually leads to later retirement but with an elasticity less than unity we calibrate our model using data from the us and find that over the last century the effect of rising incomes which promote early retirement has dominated the effect of rising lifespans our model predicts continuing declines in the optimal retirement age despite rising life expectancy provided the rate of real wage growth remains as high as in the last century

recognizing progeny in the value of life abstract this note generalizes the value of life to incorporate the preferences for descendants of a dynastically altruistic decision maker it derives the value of progeny and shows how it depends on the benthamite vs millian nature of dynastic altruism

wealth and health behavior testing the concept of a health cost 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

negligible senescence an economic life cycle model for the future abstract we propose a model of aging and health deficit accumulation model with an infinite time horizon and a steady state of constant health the time of death is uncertain and endogenous to lifestyle and health behavior this setup can be conceptualized as a strive for immortality that is never reached we discuss adjustment dynamics and show that the new setup is particularly useful to understand aging of the oldest old i e of individuals for which morbidity and mortality have reached a plateau we then show how the existence of a steady state can be used to perform comparative dynamics exercises analytically as an illustration we investigate the effects of more expensive health investment and of advances in medical technology on optimal short run and long run health behavior

group decision making in the shadow of disagreement abstract a model of group decision making is studied in which one of two alternatives must be chosen while agents differ in their preferences over alternatives everybody prefers agreement to disagreement our model is distinguished by three features private information regarding valuations differing intensities in preferences and the option to declare neutrality to avoid disagreement there is always an equilibrium in which the majority is more aggressive in pushing its alternative thus enforcing their will via both numbers and voice however under general conditions an aggressive minority equilibrium inevitably makes an appearance provided that the group is large enough such equilibria invariably display a tyranny of the minority the increased aggression of the minority always outweighs their smaller number leading to the minority outcome being implemented with larger probability than the majority alternative we fully characterize the asymptotic behavior of this model as group size becomes large and show that all equilibria must converge to one of three possible limit outcomes

information aggregation rationality and the condorcet jury theorem the condorcet jury theorem states that majorities are more likely than any single individual to select the better of two alternatives when there exists uncertainty about which of the two alternatives is in fact preferred most extant proofs of this theorem implicitly make the behavioral assumption that individuals vote sincerely in the collective decision making a seemingly innocuous assumption given that individuals are taken to possess a common preference for selecting the better alternative however in the model analyzed here we find that sincere behavior by all individuals is not rational even when individuals have such a common preference in particular sincere voting does not constitute a nash equilibrium a satisfactory rational choice foundation for the claim that majorities invariably do better than individuals therefore has yet to be derived

insurance and imperfect financial markets in grossman s demand for health model a reply to tabata and ohkusa abstract in the article by tabata and ohkusa they show that the insurance system set out in liljas liljas b 1998a the demand for health with uncertainty and insurance journal of health economics 17 153 170 does not have an optimal solution and propose a new formulation it is argued here that even though the new model works mathematically it has a less realistic economic foundation furthermore generalizing the grossman model by making the marginal utility of income variable over time is suggested to be more relevant in the case where there are imperfect financial markets and a simple example is provided overall there seems to be room for further theoretical extensions in the demand for health literature

life cycle responses to health insurance status this paper studies the lifetime effects of exogenous changes in health insurance coverage e g medicare ppaca termination of employer provided plans on the dynamic optimal allocation consumption leisure health expenditures status health and wealth and welfare we solve simulate and structurally estimate a parsimonious life cycle model with endogenous exposure to morbidity and mortality risks and exogenous health insurance by varying coverage we identify the marginal effects of insurance when young and or when old on allocations statuses and welfare our results highlight positive effects of insurance on health wealth and welfare as well as mid life substitution away from healthy leisure in favor of more health expenses caused by peaking wages and accelerating health issues

a model of pre electoral coalition formation abstract in many countries three or more candidates compete against one another in single office elections i present a model of three candidates competing for a single office in which two candidates can form a coalition prior to the election a pre electoral coalition since the candidates are both policy and office motivated one candidate can incentivize the other candidate to withdraw his candidacy by choosing a joint policy platform i examine how electoral environments such as election rules ideological distance and pre election polls influence incentives to form pre electoral coalitions i find that pre electoral coalitions are more likely to form i in plurality elections than in two round runoff elections ii as the threshold for first round victory decreases in two round runoff elections iii as the two potential coalition partners ideological distance increases conditional on divided support and iv as the fraction of office value which is transferable increases moreover i analyze and compare voter welfare under plurality and the two round runoff rules

the meaning of death some simulations of a model of healthy and unhealthy consumption simulations of a model of healthy and unhealthy consumption are used to investigate the impact of various terminal conditions on life span pathways of health related consumption and health a model in which life span and the death stock of health are fixed is compared to versions in which i the death stock of health is freely chosen ii life span is freely chosen iii both the death stock of health and life span are freely chosen the choice of terminal conditions has a striking impact on optimal plans results are discussed with reference to the existing demand for health literature and illustrate the application of iterative processes to determine optimal life span the role played by the marginal value of health capital in determining optimal plans and the importance of checking the second order conditions for the optimal choice of life span

a model of the demand for longevity and the value of life extension we specify a demand function for longevity or quantity of life along with corresponding demand functions for indicators of quality of life and a value of health and life extension function we show that the demand for health must be derived in conjunction with that for longevity and the related consumption plan and that all choices depend on initial individual endowments and terminal conditions our comparative dynamics predictions indicate that optimal health and longevity are increasing functions of endowed wealth rather than necessarily current income that improvements in opportunities to produce health can accentuate the differences between endowed health and attained longevity levels and that the value individuals ascribe to their health may be increasing over a good portion of their life cycle we use this model to analyze observed empirical variations in levels and trends of life expectancy and in exposure to health risks across different population groups

the contribution of female health to economic development we analyze the economic consequences for less developed countries of investing in female health we do this through developing and calibrating a novel micro founded dynamic general equilibrium model in which parents trade off the number of children against investments in their education and in which we allow for health related gender differences in productivity we show that better female health speeds up the demographic transition and thereby the take off toward sustained economic growth by contrast male health improvements delay the transition and take off because ceteris paribus they raise fertility investing in female health is therefore a potent lever for promoting development

longevity and public old age pensions i introduction conventional economic analysis of intertemporal or intergenerational resource allocation takes longevity as exogenously determined by biological or technological factors within this framework the institution of a mandatory public old age pensions of a pay as you go type unambiguously reduces capital accumulation the intuition behind this result is that when the young expect an old age pension after retirement and at the same time pay an earmarked payroll tax that lowers disposable income the ability and the incentive to save are reduced such a result however ignores the possibility that an individual who has a survivorship contingent title to an old age pension might use resources to increase the likelihood of survival to acquire the promised pension the fact that over the past century both longevity and the size of old age pensions have risen suggests that a more complete model that incorporates longevity as a choice variable may be useful in understanding the simultaneous increase in longevity and old age pensions ehrlich and chuma 1990 consider the demand for longevity in a world where the certain length of life is a fixed function of health care expenditures thus making longevity endogenous in their model consumers choose the optimal depreciation rate for human capital by choosing the path of health care expenditures their work paves the way for consideration of the effect of longevity contingent property rights on behavior in a more recent paper philipson and becker 1998 build on the work of ehrlich and chuma by modeling longevity contingent claims in the form of old age pensions among other things they find that an increase in a longevity contingent old age pension will induce individuals to live longer as a result of this longer life philipson and becker question the traditional result that pay as you go old age pensions always reduce the capital stock because workers who choose greater longevity may also choose to save more during their working years to finance their longer retirement period in this paper we introduce endogenous and uncertain lifetime into a two period overlapping generations olg model we depart from the traditional diamond type olg model by measuring longevity as the probability of survival into the second period and by allowing individuals to affect their survival probability through spending on longevity extending activities within this framework we examine the effects of a pay as you go old age pension on longevity and capital accumulation under two polar assumptions concerning the existence and absence of a fair intragenerational annuity market in either case the longevity effect of an increase in the old age pension is neutral while the capital stock effect is strictly negative if the interest rate and population growth rate are equal e g if the economy is on a golden rule path surprisingly increasing the old age pension produces both a negative longevity and savings effect for the more relevant case where the interest rate is larger than the population growth rate that an increase in the old age pension produces a negative capital stock effect is anticipated but the neutral or negative effect on longevity is counterintuitive it is counterintuitive because the empirical evidence seems to show lockstep increases in both longevity and government provided retirement benefits in the form of pensions and heath care benefits furthermore longevity insurance conjures up the moral hazard problem where increased utilization is expected with government provision the funding pool expands with use the cost being borne by workers the fact that the workers bear the burden of increasing the old age pension helps explain the longevity results we obtain when the population grows at the same rate as the return on capital an increase in the pension is offset by a dollar for dollar reduction in private savings leaving second period consumption unchanged

optimal choice of health and retirement in a life cycle model abstract we examine within a life cycle model the simultaneous choice of health care and retirement together with consumption health tends to have an impact on retirement through morbidity determining earnings and the disutility of work and through longevity determining the need to accumulate retirement wealth conversely the age of retirement drives the demand for health care through the value of survival and the value of morbidity reductions we characterise the optimal relationship between health expenditure and retirement and apply our model to analyse the effects of moral hazard in the annuity market while moral hazard always induces excessive health investments and an excessive duration of working life it also triggers an excessive level of consumption if the impact of health on the disutility of work is sufficiently large we examine a transfer scheme and mandatory retirement as policies towards curtailing moral hazard numerical analysis illustrates the role of moral hazard in shaping the life cycle allocation

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

preventive care underused even when free is there something else at work explaining the rationale of preventive care underuse is a difficult task considering its great benefits for health underuse is even more difficult to explain in countries like italy where preventive care can be obtained for free in this article we investigate the determinants of prevention underuse with an empirical model based on human capital theory which also includes three factors to which little attention has been paid so far role played by the general practitioner gp nonmonetary barriers to access and health beliefs we apply a recursive probit model explaining both recourse to prevention and to the gp which allows us to adequately measure the effect of the latter on the former and to quantitatively compare the determinants of curative and preventive care we find that the gp plays a minor role in prevention use but that nonmonetary barriers to access and health beliefs are strong determinants of preventive care demand finally we also find support for both grossman s capital depreciation the

elections with limited information a fulfilled expectations model using contemporaneous poll and endorsement data as information sources a one dimensional model of two candidate elections under asymmetric information is theoretically developed and experimentally tested candidates do not know voter utility functions and most voters are uninformed about candidate policy positions a fulfilled expectations equilibrium is defined using poll and endorsement data as information sources it is proved that with any positive fraction of informed voters any equilibrium extracts all available information all participants voters and candidates alike act as if they were fully informed for fixed candidate strategies a dynamic is given for convergence to voter equilibrium and this process is shown to imply a bandwagon effect

uncertain lifetime life protection and the value of life saving abstract the analytic innovation is treating life s end as uncertain and life expectancy as partly the product of individuals efforts to self protect against mortality and morbidity risks the demand for self protection is modeled in a stochastic life cycle framework under alternative insurance options the model helps explain the trend and systematic diversity in life expectancies across different population groups as well as the wide variability in reported value of life saving estimates the analysis yields a closed form solution for individuals value of life saving that is estimable empirically it reflects the impacts of specific personal characteristics and alternative insurance options on both life expectancy and its valuation

the problem of population and growth a review of the literature from malthus to contemporary models of endogenous population and endogenous growth abstract this paper deals with the evolution of the literature on the problem of population and growth from the classical period to the recent literature on endogenous growth and development the problem concerns two distinct issues 1 how to explain the observed covariation of the levels and rates of growth of per capita income and population size over time and space and 2 how to improve the human condition represented by these variables through an accommodating social policy the evolution of the literature we survey is reflected by the progressive treatment of key variables as endogenous rather than exogenous to the growth process it is also reflected by a shift from the historical concern about population explosion and its implications for growth to the more recent concern about the association between growth and population implosion in many developed countries

on the microeconomics of food and malnutrition under endogenous discounting abstract this paper explores the microeconomics and dynamics of food and nutrition it examines the linkages between malnutrition and the incentive to invest and accumulate capital the analysis focuses on a dynamic model where preferences about the future depend on nutrition and health situations of malnutrition cover both ends of the spectrum from nutrient deficiency to obesity the model involves preferences that are not time additive and exhibit endogenous discounting this provides a framework to investigate the factors affecting consumption and investment behavior the adverse investment incentives of malnutrition are examined

an economic analysis of life expectancy by gender with application to the united states this paper presents an economic model to explain the behavior of life expectancy of both sexes it explicitly examines the relationship between the gender gap in life expectancy and the gender gap in pay it shows that as the latter narrows over the course of economic development the former may initially expand but will eventually shrink simulation results from our model accord with the behavior of life expectancy for both sexes since the 1940s in the united states

viewpoint the economics of hunter gatherer societies and the evolution of human characteristics we argue for attention to the evolutionary origins of economic behaviour going beyond this we argue that the economy of hunting and gathering was the context in which evolution shaped human characteristics that underlie modern economic behaviour we first reconsider the basic biological question of why aging occurs at all we then illustrate the usefulness of considering foraging economics by asking why it is biologically advantageous for humans to live long after their reproductive career is over further we argue that foraging economics would have led to the simultaneous exaggeration of intelligence and of longevity that is characteristic of humans jel classification a12 j10 l economie des societes de chasseurs cueilleurs et l evolution des traits humains les auteurs suggerent qu on doit porter plus d attention aux origines evolutionnaires du comportement economique poussant un pas plus loin ils suggerent que l economie des chasseurs cueilleurs a ete le contexte ou l evolution a conforme les traits humains qui sous tendent le comportement economique moderne d abord ils reexaminent la question biologique de base a savoir pourquoi il y a vieillissement ensuite ils illustrent l utilite d une economie des activites de cueillette chasse et engrangement en posant la question a savoir pourquoi il est biologiquement avantageux pour les humains de bien vivre apres que leur periode de reproduction active est terminee finalement ils suggerent que ce type d economie aurait entraine simultanement une surestimation de l intelligence et de la longevite deux traits des humains

the gender gap in mortality how much is explained by behavior abstract in developed countries women are expected to live about 4 5 years longer than men in this paper we develop a novel approach to gauge the extent to which gender differences in longevity can be attributed to gender specific preferences and health behavior we set up a physiologically founded model of health deficit accumulation and calibrate it using recent insights from gerontology from fitting life cycle health expenditure and life expectancy we obtain estimates of the gender specific preference parameters we then perform the counterfactual experiment of endowing women with the preferences of men in our benchmark scenario this reduces the gender gap in life expectancy from 4 6 to 1 4 years when we add gender specific preferences for unhealthy consumption the model can motivate up to 89 percent of the gender gap our theory offers also an economic explanation for why the gender gap declines with rising income

manipulation through political endorsements abstract we study elections with three candidates under plurality voting a candidate is a condorcet loser if the majority of the voters place that candidate at the bottom of their preference rankings we first show that a condorcet loser might win the election in a three way race next we introduce to the model an endorser who has private information about the true probability distribution of the preferences of the voters observable endorsements facilitate coordination among voters who may otherwise split their votes and lead to the victory of the condorcet loser when the endorser has an ideological bias towards one of the candidates the coordination impact of endorsements remains unaltered moreover the endorser successfully manipulates the outcome of the election in favor of his bias even if his ideological bias is known by the voters the results are true for any endorsement cost and any magnitude of bias as long as the electorate is large enough

longevity and life cycle savings we add health and longevity to a standard model of life cycle saving and show that under plausible assumptions increases in life expectancy lead to higher savings rates at every age even when retirement is endogenous in a stationary population these higher savings rates are offset by increased old age dependency but during the disequilibrium phase when longevity is rising the effect on aggregate savings rates can be substantial we find empirical support for this effect using a cross country panel of national savings rates

comparative dynamic analysis of the full grossman model the paper applies the method of comparative dynamic analysis to the full grossman model for a particular class of solutions it derives the equations implicitly defining the complete trajectories of the endogenous variables relying on the concept of frisch decision functions the impact of any parametric change on an endogenous variable can be decomposed into a direct and an indirect effect the focus of the paper is on marginal changes in the rate of health capital depreciation it also analyses the impact of either initial financial wealth or the initial stock of health capital while the direction of most effects remains ambiguous in the full model the assumption of a zero consumption benefit of health is sufficient to obtain a definite for any direct or indirect effect

a theory of time preference grant a taylor this article proposes that people generally prefer present consumption to future consumption because their expected utility from consumption eventually falls as their mental and physical abilities eventually decline with age moreover contrary to the ubiquitous intertemporal formulation with a constant rate of time preference and contrary to three recent theories of time preference that predict decreasing discounting as people age this article asserts that discounting increases over the life cycle this hypothesis is supported by data from the panel study of income dynamics as well as evidence from numerous previous studies jel d91 1 introduction despite the almost universal assumption of time preference in models of intertemporal choice an adequate explanation of why people discount the future has not been provided 1 olsen and bailey 1981 make a convincing case for positive time preference by contradiction i e without time preference models of intertemporal choice do not yield predictions consistent with observed behavior but they do not explain why individuals would rationally discount the future 2 three recent studies have attempted to provide the explanation rogers 1994 argues that societies that discount the future at a rate of about 2 will be the long run survivors in an evolutionary fitness situation 3 posner 1995 argues that discounting occurs because individuals have multiple selves that is people are weighting their present consumption far more heavily than their future consumption because the present self and the future self are in some meaningful sense separate persons 92 becker and mulligan 1997 argue that discounting occurs because of a rational defective recognition of future utilities 730 but as will be shown these three theories are inconsistent with empirical evidence on consumption over the life cycle in at least one important aspect this article constructs and empirically supports a new theory of time preference the hypothesis is that people do not have an intrinsic preference for present consumption relative to future consumption instead the instantaneous utility function also known as the felicity function is expected to vary with age just as people s physical and mental abilities vary with age in other words the ability to enjoy consumption eventually deteriorates over the life cycle along with other abilities this life cycle view of the expected utility function causes people to rationally devalue consumption in periods of low expected felicity that is discount future consumption perhaps this is what is meant by the cliche don t wait until you are too old to enjoy it moreover this causes individuals implicit discount rates to vary systematically with age 4 in fact this provides the testable implication of the theory the standard specification of intertemporal preferences holds the discount rate constant over th e life cycle 5 to be more precise in the early stage of the life cycle the capacity to enjoy consumption may be expected to rise hence a young individual s discount rate may be negative figure 1 illustrates this possibility with a hypothetical adult life cycle marginal felicity function for a given level of consumption u sub c c a c denotes consumption and a denotes age and its corresponding discount rate function rho a the vast majority of wealth is held by older people that is those in the declining stage of their abilities thus the preference for present consumption over future consumption appears to hold in the aggregate this view of intertemporal preferences may at first seem inconsistent with practically all dynamic analyses which are based on the notion of stationary utility on further consideration however the hypothesis is quite consistent with modern consumer theory since becker 1965 it has been widely accepted that households derive utility from commodities that are produced with market goods combined with household time and skills i

intergenerational trade longevity and economic growth we develop an overlapping generations model of endogenous growth in which human capital is the engine of growth and the generations are linked through material and emotional interdependencies within the family parents invest in their children to achieve both old age support care and emotional gratification and material support from children is determined through self enforcing implicit contracts we show that optimal intergenerational trade can then lead to maximization of growth opportunities our model produces a theory of the demographic transition linking longevity fertility and economic growth we also show that while population aging may raise the growth rate an increase in young age longevity is likely to produce a greater increase in the growth rate and a reduction in the fertility rate in a growth equilibrium these predictions and the model s implications concerning the behavior of private savings during the takeoff period appear consistent with empirical evidence

informality labor regulation and the business cycle abstract we ask how labor regulation and informality affect macroeconomic volatility and the propagation of shocks in emerging economies for this we propose a small open economy business cycle model with frictional labor markets endogenous labor participation and an informal sector our own calculations from the enoe national household survey reveal that these three margins are important to account for the labor market dynamics in mexico the model is calibrated to the mexican economy in particular to business cycle moments for employment and informality we show that interest rate shocks which affect specifically job creation in the formal sector are key to obtain a countercyclical informality rate in our model the presence of an informal sector might help to mitigate the impact of a stringent labor regulation on employment and consumption fluctuations in that sense it adds flexibility to the economy in its adjustment to shocks but at the cost of a lower productivity and an excess tfp and output volatility reducing the burden of labor regulation to the formal sector might achieve the goal of reducing output volatility while improving at the same time the efficiency in the allocation of resources

non monotonic health behaviours implications for individual health related behaviour in a demand for health framework a number of behaviours influence health in a non monotonic way physical activity and alcohol consumption for instance may be beneficial to one s health in moderate but detrimental in large quantities we develop a demand for health framework that incorporates the feature of a physiologically optimal level an individual may still choose a physiologically non optimal level because of the trade off in his or her preferences for health versus other utility affecting commodities however any deviation above or below the physiologically optimal level will be punished with respect to health distinguishing between two individual types we study a the qualitative properties of optimal time paths of health capital and health related behaviour b the perturbations of the optimal time paths that result from changes in exogenous parameters and c steady state properties predictions of the model and the implications for empirical analysis are discussed at length some comments on potential future extensions conclude the paper

growth and welfare under endogenous lifetime we study the role of endogenous healthcare choices by households to extend their expected lifetimes on economic growth and welfare in a decentralized overlapping generations economy with the realistic feature that households savings are held in annuities we characterize healthcare spending in the decentralized market equilibrium and its effects on economic growth we then identify the moral hazard effect in healthcare investments when annuity rates are conditioned on average mortality and explain the conditions under which it will lead to over investment in healthcare moreover we specify the general equilibrium effects and macroeconomic repercussions associated with this moral hazard effect calibrating our model to oecd data we find that the moral hazard effect may be substantial and implies sizeable welfare losses of approximately 1 5 at a more general level our study suggests that welfare improvements from longevity increases may be quite lower than sometimes assumed when considered in planner economies

health and other asset holdings despite clear evidence of correlations between financial and medical statuses and decisions most models treat financial and health related choices separately this article bridges this gap by proposing a tractable dynamic framework for the joint determination of optimal consumption portfolio holdings health investment and health insurance we solve for the optimal rules in closed form and capitalize on this tractability to gain a better understanding of the conditions under which separation between financial and health related decisions is sensible and of the pathways through which wealth and health determine allocations welfare and other variables of interest such as expected longevity or the value of health furthermore we show that the model is consistent with the observed patterns of individual allocations and provide realistic estimates of the parameters that confirm the relevance of all the main characteristics of the model

consumption and investment demand when health evolves stochastically abstract the health capital model of grossman 1972 is extended to account for uncertainty in the rate at which a stock of health depreciates two general versions of the model are contemplated one with a fully functioning financial market and the other in its absence the comparative dynamics of the feedback form of the consumption and health investment demand functions are studied in these general settings where it is shown that the key to deriving refutable results is to determine how a parameter or state variable affects the expected lifetime marginal utilities of health and wealth to add further reach to the results a simplified stochastic control problem is explicitly solved yielding estimable structural feedback demand functions

quality of life and the wtp for an increased life expectancy at an advanced age abstract in this study we report an attempt to measure the value adult swedes impute to an increased survival probability at high ages a rating scale between the worst possible quality of life 1 and the best possible quality of life 10 is used to indicate the quality of life a person expects to achieve at an advanced age we find a highly significant correlation between this quality measure and the insurance premium a person is willing to pay in exchange for a programme increasing the expected length of life by one year conditional on having survived until the age of 75 years the maximum insurance premium the average person is willing to pay for such a programme is less than 1500 the willingness to pay increase with a person s age but at a low rate the implied average marginal rate of time preference is about 1 percent

health status and health dynamics in an empirical model of expected longevity expected longevity is an important factor influencing older individuals decisions such as consumption savings purchase of life insurance and annuities claiming of social security benefits and labor supply it has also been shown to be a good predictor of actual longevity which in turn is highly correlated with health status a relatively new literature on health investments under uncertainty which builds upon the seminal work by grossman grossman m 1972 on the concept of health capital and demand for health journal of political economy 80 223 255 has directly linked longevity with characteristics behaviors and decisions by utility maximizing agents our empirical model can be understood within that theoretical framework as estimating a production function of longevity using longitudinal data from the health and retirement study we directly incorporate health dynamics in explaining the variation in expected longevities and compare two alternative measures of health dynamics the self reported health change and the computed health change based on self reports of health status in 38 of the reports in our sample computed health changes are inconsistent with the direct report on health changes over time and another 15 of the sample can suffer from information losses if computed changes are used to assess changes in actual health these potentially serious problems raise doubts regarding the use and interpretation of the computed health changes and even the lagged measures of self reported health as controls for health dynamics in a variety of empirical settings our empirical results controlling for both subjective and objective measures of health status and unobserved heterogeneity in reporting suggest that self reported health changes are a preferred measure of health dynamics

centripetal and centrifugal incentives in electoral systems this paper investigates how electoral laws affect the position taking incentives of parties and candidates it seeks to extend the finding presented in the classical median voter theorem to a wide class of electoral systems or to show the limits of such extension the factors examined are the district magnitude the electoral formula the number of votes each voter is allowed to cast whether voters can cumulate their votes and whether voters can partially abstain i suggest a crude division of electoral systems into those producing predominantly centripetal incentives and those producing predominantly centrifugal incentives among the factors found to produce centripetal incentives at least in noncumulative systems are the following increases in the number of votes per voter outlawry of partial abstention and decreases in the district magnitude in systems allowing the cumulation of votes matters are a bit different

the value of life and the rise in health spending over the past half century americans spent a rising share of total economic resources on health and enjoyed substantially longer lives as a result debate on health policy often focuses on limiting the growth of health spending we investigate an issue central to this debate is the growth of health spending a rational response to changing economic conditions notably the growth of income per person we develop a model based on standard economic assumptions and argue that this is indeed the case standard preferences of the kind used widely in economics to study consumption asset pricing and labor supply imply that health spending is a superior good with an income elasticity well above one as people get richer and consumption rises the marginal utility of consumption falls rapidly spending on health to extend life allows individuals to purchase additional periods of utility the marginal utility of life extension does not decline as a result the optimal composition of total spending shifts toward health and the health share grows along with income in projections based on the quantitative analysis of our model the optimal health share of spending seems likely to exceed 30 percent by the middle of the century

grossman s missing health threshold we present a generalized solution to grossman s model of health capital 1972 relaxing the widely used assumption that individuals can adjust their health stock instantaneously to an optimal level without adjustment costs the grossman model then predicts the existence of a health threshold above which individuals do not demand medical care our generalized solution addresses a significant criticism the model s prediction that health and medical care are positively related is consistently rejected by the data we suggest structural and reduced form equations to test our generalized solution and contrast the predictions of the model with the empirical literature

old age longevity and mortality contingent claims this paper analyzes the savings and longevity impacts of mortality contingent claims defined here as income measures such as annuities and life insurance under which earned income is contingent on the length of one s life the postwar increase in mandatory annuity and life insurance programs as well as the rapid increase in the life expectancy of older ages motivates a better understanding of the incentive effects that mortality contingent claims have on longevity related behavior we claim that these incentives in often alter the standard conclusions obtained about old age support when mortality is treated exogenously in particular we argue that annuities involve moral hazard effects that increase longevity and among other things introduce a positive interaction between public programs for health care and income support for the elderly programs that have grown enormously in developed countries

portfolio choice in retirement health risk and the demand for annuities housing and risky assets in a life cycle model a retiree faces stochastic health depreciation and chooses consumption health expenditure and the allocation of wealth between bonds stocks and housing the model explains key facts about asset allocation and health expenditure across health status and age the portfolio share in stocks is low overall and is positively related to health especially for younger retirees the portfolio share in housing is negatively related to health for younger retirees and falls significantly in age finally out of pocket health expenditure as a share of income is negatively related to health and rises in age

estimating the effect of individual time preferences on the use of disease screening economists have long been interested in evaluating the role that time preferences play in a wide range of economic decisions in the health care arena time preferences may be an especially important determinant of many decisions particularly the use of preventative health care one potential barrier to patient adoption of preventative screening regimens is that they impose current costs on consumers with the hope of lower costs in the future using data from a national survey we jointly estimate latent discount rate and preventative service demand models using a limited information maximum likelihood estimator iterated m estimator the results suggest that discount rates are generally inversely related to the likelihood of most screening tests

reference health and the demand for medical care we propose that health in prior periods termed reference health is theoretically and empirically relevant to the demand for medical care to address non normality in the distributions of medical care spending consumption and health we use a conditional density estimator nested in a finite mixture framework we find that reference health can help explain the variation in spending among individuals with the same contemporaneous health particularly in the top tail of the spending distribution we demonstrate that omitting reference health understates the potential cost savings of healthy aging initiatives by 50 percent this article is protected by copyright all rights reserved

the causes of childhood obesity a survey childhood obesity rates are rapidly rising in many countries since it is highly likely that obesity will persist into adulthood current rates undermine the health and future of people in developed as well as developing countries this public health epidemic carries significant economic social as well as individual level consequences and has become a research topic of significant interest for various disciplines including economics we survey the literature in economics and related disciplines associated with the causes of childhood obesity and synthesize the results to provide a better understanding of the explanations for the rising childhood obesity rates this is an important step in crafting effective policies to combat global childhood obesity trends

alcoholism work and income this article reports on an empirical analysis of the relationships between alcoholism and income and working we show that the relationships between alcoholism and labor market success have important age or life cycle dimensions we present evidence that alcoholism may affect income more by restricting labor market participation than by affecting the wages of workers finally we demonstrate that the effects of alcoholism on earnings depend on the extent to which one controls for other covariates associated with alcoholism as such we suggest that there may be important indirect as well as direct effects of alcoholism on labor market success

on the theory of strategic voting many analyses of plurality rule elections predict the complete coor dination of strategic voting and hence support for only two candidates here i suggest that stable multi candidate support will arise in equilibrium a group of voters must partially coordinate behind one of two challenging candidates in order to dislodge a disliked incumbent in a departure from existing models the popular support for each challenger is uncertain this support must be inferred from the private observation of informative signals such as the social communication of pref erences throughout the electorate or the imperfect observation of opinion polls the uniquely stable voting equilibrium entails only limited strategic voting and hence incomplete coordination this is due to the surprising presence of negative feed back an increase in the degree of strategic voting by others reduces the incentives for an individual to vote strategically the incentive to vote strategically is lower in relatively marginal elections after controlling for the distance from contention of a trailing preferred challenger a calibration of the model applied to the uk general election of 1997 is consistent with the impact of strategic voting and the reported accuracy of voters understanding of the electoral situation it suggests that nearly 50 seats may have been lost by the conservative party due to strategic voting 1 plurality rule elections and strategic voting 1 1 strategic voting and duverger s law plurality rule elections where the winner is the candidate who receives the largest number of votes are vulnerable to strategic voting a voter might well switch away from her preferred candidate and toward a perceived leader in the hope of exerting a greater influence over the outcome of the election this phenomenon has long been the focus of both economic and political scientific study in an influential essay riker 1982b cited droop s 1871 eloquent exposition of the strategic voting problem 1 i oer my grateful thanks to the many friends colleagues seminar participants referees and editors who have oered insightful comments during the long gestation of this paper its antecedents and companion work special thanks go to steve fisher whose empirical analysis of strategic voting raised many of the questions that i seek to answer in this paper and to chris wallace this particular paper brings together much of the analysis previously circulated in the papers a new theory of strategic voting strategic voting under the qualified majority rule and idiosyncrasy information and the impact of strategic voting

the evolution of human life expectancy and intelligence in hunter gatherer economies the economics of hunting and gathering must have driven the biological evolution of human characteristics since hunter gatherer societies prevailed for the two million years of human history these societies feature huge intergenerational resource flows suggesting that these resource flows should replace fertility as the key demographic consideration it is then theoretically expected that life expectancy and brain size would increase simultaneously as apparently occurred during our evolutionary history the brain here is considered as a direct form of bodily investment but also crucially as facilitating further indirect investment by means of learning by doing

stability and coordination in duverger s law a formal model of preelection polls and strategic voting this paper investigates the dynamics of the wasted vote phenomenon and duverger s law i construct a theoretical model in order to consider how preelection polls serve to inform the electorate about the relative chances of the candidates and how that information acts over time to decrease the support of the trailing candidate the results shed light on how public opinion polls can aggregate information in the electorate and coordinate voters on the viable candidates in the election specifically i show that in a bayesian game model of strategic voting there exist non duvergerian equilibria in which all three candidates receive votes in the limit these equilibria require extreme coordination however and any variation in beliefs leads voters away from them to one of the duvergerian equilibria thus non duvergerian equilibria are unstable while two party equilibria are not in addition i describe how preelection polls provide information to voters about the viability of candidates and can thus be used by voters to coordinate on a duvergerian outcome

sequential voting in large elections with multiple candidates abstract i analyze strategic voting incentives in large elections with three candidates when voting takes place sequentially voters have perfect information about their private preferences but do not know the distribution from which other voters preferences are drawn if a candidate finishes last in an early voting round voters deduce that this candidate is likely to be less popular amongst the remaining voters and the remaining voters almost always have an incentive to stop voting for this candidate by contrast sincere voting equilibria can exist under either simultaneous voting or an early voting round of sequential voting without knife edge assumptions

evolution and human nature from an economic perspective on individual decision making human beings have three key characteristics preferences beliefs and rationality beliefs are the probabilities with which people think various outcomes will occur conditional on information that might be available preferences are the rankings over the set of gambles that are based on such beliefs over the outcomes rationality is the extent to which people succeed in choosing optimal actions in the light of their beliefs and preferences and the extent to which their beliefs are appropriately modified by their information economists typically impose only rather weak assumptions on preferences for example preferences are taken to be transitive and sometimes less explicitly exogenous and unchanging stronger assumptions are typically imposed on preferences in specific contexts however for example preferences over time might be represented by an additively separable function with constant rate of discount despite widespread recognition that this case is a special one further attitudes to risk are often represented by the expected utility theorem which rests on assumptions that are strong if also appealing the assumptions made on rationality in particular are usually very strong that is rationality in economic models usually entails the exact optimization of preferences and modification of beliefs in accordance with bayes theorem the economist s basic picture of preferences beliefs and rationality has been subject to challenges from a growing number of empirical anomalies the proposed explanations of these anomalies involve relaxing the assumptions that economists make on these preferences beliefs or rationality for example preferences

life and growth some technologies save lives new vaccines new surgical techniques safer highways others threaten lives pollution nuclear accidents global warming and the rapid global transmission of disease how is growth theory altered when technologies involve life and death instead of just higher consumption this paper shows that taking life into account has first order consequences under standard preferences the value of life may rise faster than consumption leading society to value safety over consumption growth as a result the optimal rate of consumption growth may be substantially lower than what is feasible in some cases falling all the way to zero

vintage human capital demographic trends and endogenous growth we study how economic growth is affected by demographics in an overlapping generations model with a realistic survival law individuals optimally chose the dates at which they leave school to enter the labor market and at which they retire endogenous growth arises thanks to the accumulation of generation specific human capital favorable shifts in the survival probabilities always induce longer schooling and later retirement but have an ambiguous effect on growth the relationship between the growth of population and per capita growth is hump shaped increases in longevity can be responsible for a switch from a no growth regime to a sustained growth regime and for a positive relationship between fertility and growth to vanish

optimal social security in a dynastic model with human capital externalities fertility and endogenous growth abstract in this paper we investigate the optimal scale of pay as you go social security in a dynastic family model with human capital externalities fertility and endogenous growth human capital externalities reduce the return to human capital investment and hence lead to under investment in human capital and over reproduction of the population if the taste for the number of children is sufficiently weak relative to the taste for the welfare of children social security can be welfare enhancing by reducing fertility and raising human capital investment per child

aging and health financing in the u s a general equilibrium analysis abstract we quantify the effects of population aging on the u s healthcare system our analysis is based on a stochastic general equilibrium overlapping generations model of endogenous health accumulation calibrated to match pre 2010 u s data we find that population aging not only leads to large increases in medical spending but also a large shift in the relative size of private vs public insurance without the affordable care act aca aging by itself leads to a 40 increase in health expenditures by 2060 and a 9 6 increase in gdp which is mainly driven by the increase of the fraction of older higher risk individuals in the economy as well as behavioral responses to aging and the subsequent expansion of the healthcare sector aging increases the premium in group based health insurance ghi markets and enrollment in ghi decreases while the individual based health insurance ihi market medicaid and medicare expand significantly the size of medicare will almost double by 2060 as the elderly dependency ratio increases additional funds equivalent to roughly 2 7 of gdp are required to finance medicare and medicaid the introduction of the aca increases the fraction of insured workers to almost 100 by 2060 compared to 82 without the aca this increase is driven by the stabilization of ghi markets and the further expansions of medicaid and the ihi market the aca mitigates the increase of healthcare costs by reducing the number of the uninsured who pay the highest market price for healthcare services overall the aca adds to the fiscal cost of population aging mainly via the medicaid expansion our findings demonstrate the importance of accounting for behavioral responses structural changes in the healthcare sector and general equilibrium adjustments when assessing the economy wide effects of aging

on adaptation and the demand for health the purpose of this paper is to analyse the impacts of adaptation to failing health this is done by integrating adaptation processes in a grossman type of pure consumption model model simulations show that adaptation affects the health variables by lowering the incentives to invest in health as well as smoothing the optimal health stock path over the life cycle whether or not the risk of mortality is an object of choice has important effects when studying adaptation as well as for the joint development of the health variables