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Journal of Population Economics

, Volume 26, Issue 4, pp 1379–1408 | Cite as

Subjective mortality hazard shocks and the adjustment of consumption expenditures

Original Paper
First Online:
Received:
Accepted:

Abstract

I estimate the effect of shocks to subjective mortality hazards on consumption expenditures of retired individuals using the Survey of Health, Ageing and Retirement in Europe. I measure mortality expectations with survey responses on survival probabilities. To create plausibly exogenous variation in mortality hazard, I use the death of a sibling as an instrument. My results show that survey responses contain economically relevant information about longevity expectations and confirm the predictions of life-cycle theories about the effect of these expectations on intertemporal choice.

Keywords

Consumption decisions Subjective longevity IV estimation 
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Notes

Acknowledgements

An earlier version of this paper is a part of my PhD thesis written at the Central European University. I am grateful for comments received from the anonymous referees, Gábor Kézdi, Miklós Koren, from seminar participants at CEU, HECER, IHS, ROA, The University of Edinburgh, and at the European Winter Meeting of the Econometric Society in Rome.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  1. 1.School of EconomicsThe University of EdinburghEdinburghUK

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