Health and (other) Asset Holdings
Details
State: Public
Version: author
Serval ID
serval:BIB_6C16E201D2BA
Type
Report: a report published by a school or other institution, usually numbered within a series.
Publication sub-type
Working paper: Working papers contain results presented by the author. Working papers aim to stimulate discussions between scientists with interested parties, they can also be the basis to publish articles in specialized journals
Collection
Publications
Institution
Title
Health and (other) Asset Holdings
Institution details
NCCR (National Centre of Competence in Research), FINRISK (Financial Valuation and Risk Management)
Issued date
05/2009
Number
528
Genre
working paper series
Language
english
Number of pages
67
Notes
This research has been carried out within the NCCR FINRISK project on "Macro Risk, Systemic Risks and International Finance"
Abstract
The empirical literature on the asset allocation and medical expenditures of U.S. households consistently shows that risky portfolio shares are increasing in
both wealth and health whereas health investment shares are decreasing in these same variables. Despite this evidence, most of the existing models treat financial
and health-related choices separately. This paper bridges this gap by proposing a tractable framework for the joint determination of optimal consumption, portfolio
and health investments. We solve for the optimal rules in closed form and show that the model can theoretically reproduce the empirical facts. Capitalizing on this
closed-form solution, we perform a structural estimation of the model on HRS data. Our parameter estimates are reasonable and confirm the relevance of all the main characteristics of the model.
both wealth and health whereas health investment shares are decreasing in these same variables. Despite this evidence, most of the existing models treat financial
and health-related choices separately. This paper bridges this gap by proposing a tractable framework for the joint determination of optimal consumption, portfolio
and health investments. We solve for the optimal rules in closed form and show that the model can theoretically reproduce the empirical facts. Capitalizing on this
closed-form solution, we perform a structural estimation of the model on HRS data. Our parameter estimates are reasonable and confirm the relevance of all the main characteristics of the model.
Keywords
portfolio, health investment, mortality risk
Publisher's website
Create date
22/02/2011 14:26
Last modification date
20/08/2019 14:26
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