This paper documents significantly steeper declines in nondurable expenditures at older ages in the United Kingdom compared to the United States, in spite of income paths being similar. Several possible causes are explored, including different employment paths, housing ownership and expenses, levels and paths of health status, number of household members, and out-of-pocket medical expenditures. Among all the potential explanations considered, those relating to health care—differences in levels and age paths in medical expenses and medical expenditure risk—can fully account for the steeper declines in nondurable consumption in the United Kingdom compared to the United States.
Authors
CPP Co-Director
James is Senior Research Fellow and Professor of Economics at Manchester, working on broad issues in the economics of retirement, savings and health.
CPP Co-Director
Richard is Co-Director of the Centre for the Microeconomic Analysis of Public Policy (CPP) and Senior Research Fellow at IFS.
James Smith
Associate Director
Peter joined in 2009. He has published several papers on the microeconomics of household spending and labour supply decisions over the life-cycle.
Journal article details
- DOI
- 10.1257/pol.20170182
- Publisher
- American Economic Association
- Issue
- Volume 11, Issue 3, October 2019, pages 27-54
Suggested citation
Banks, J et al. (2019). 'Life-cycle consumption patterns at older ages in the United States and the United Kingdom: can medical expenditures explain the difference?' 11(3/2019), pp.27–54.
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