6533b7ddfe1ef96bd1273e9b

RESEARCH PRODUCT

Optimal savings and health spending over the life cycle

Tamara Fioroni

subject

medicine.medical_specialtyTime FactorsHealth spendingEconomics Econometrics and Finance (miscellaneous)Decision MakingIntertemporal choiceOverlapping generations modelIntertemporal choiceGross domestic productStatistics NonparametricResource AllocationMicroeconomicsCost SavingsEconomicsmedicineHumansEmpirical evidenceSettore SECS-P/01 - Economia Politicahealth care economics and organizationsHealth economicsModels StatisticalAdult mortalitySavingPublic healthHealth PolicyModels EconomicReal gross domestic productItalyQuality of LifeHealth ResourcesDemographic economicsIntertemporal choice; Health spending; Adult mortality; SavingHealth ExpendituresPublic finance

description

This paper investigates the relationship between saving and health spending in a two-period overlapping generations economy. Individuals work in the first period of life and live in retirement in old age. Health spending is an activity that increases quality of life and longevity. Empirical evidence shows that both health spending and saving behave as luxury goods but their behaviour differs markedly according to the level of per capita GDP. The share of saving on GDP has a concave shape with respect to per capita GDP, whereas the share of health spending on GDP increases more than proportionally with respect to per capita GDP. The ratio of saving to spending is nonlinear with respect to income, i.e. first increasing and then decreasing. This ratio, in the proposed model, is equal to the ratio between the elasticity of the utility function with respect to saving and the elasticity of the utility function with respect to health.

yearjournalcountryeditionlanguage
2010-01-01
10.1007/s10198-009-0183-0http://hdl.handle.net/11562/373230