Optimal Aging with Uncertain Death
Center for European Governance and Economic Development Research, Number 160, June 2013
19 Pages Posted: 25 Jun 2013 Last revised: 2 Jul 2013
Date Written: June 24, 2013
Abstract
This paper extends the theory of optimal aging and death (Dalgaard and Strulik, 2010, 2013) towards uncertain death. Specifically, it is assumed that at any age the probability to survive depends on the number of health deficits accumulated. At the expense of less analytical tractability the model provides a formal description of aging as conceptualized in modern biology, i.e. as an inherently stochastic process according to which the timing of death of a person is not determined by his or her age but by the number of accumulated health deficits. The stochastic model basically conrms the earlier deterministic model with respect to its predictions on the association between income and life-expectancy across countries.
Keywords: Aging, Longevity, Health, Savings, Preston Curve
JEL Classification: D91, J17, J26, I12
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