A (2010); Health and Wealth in a Lifecycle Model

This paper presents a preliminary model of health investments over the life cycle. Health a¤ects both longevity and provides ow utility. We analyze the interplay between consumption choices and investments in health by solving each households dynamic optimization problem to obtain predictions on health invest-ments and consumption choices over the lifecycle. Our preliminary model does a good job of matching the distribution of medical expenses across households in the sample. We illustrate the scope of future model applications by examining the e¤ects of a stylized Medicare program on patterns of wealth and mortality. The research reported herein was pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium (RRC). The \u85ndings and conclusions expressed are solely those of the authors and do not represent the views of SSA, any agency of th