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Income as a Proxy for the Economic Status of the Elderly

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Working Paper Number SIPP-WP-58

This paper explores the importance of having asset data to evaluate the economic situation of the elderly. We attempt to test the role of assets in evaluation economic status behaviorally, in the context of a common decision made by elderly families and individuals--the decision to purchase health insurance. A simple model of insurance purchase is proposed, incorporating both net wealth and a proxy for desired bequest. Past research has hypothesized bequest-oriented consumer behavior (Blinder et al., 1981; Kotlikoff, 1981); our model represents an application of that concept to the demand for supplement insurance among the elderly. Past analyses of supplemental coverage among Medicare beneficiaries have related coverage to income (Long et al., 1982; Rice and McCall, 1985; Huang, et al., 1987), but not assets.

Page Last Revised - October 8, 2021
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