Longevity and Life Cycle Savings

52 Pages Posted: 28 Feb 2002 Last revised: 28 Jul 2022

See all articles by David E. Bloom

David E. Bloom

Harvard University - T.H. Chan School of Public Health; National Bureau of Economic Research (NBER)

David Canning

Queen's University Belfast

Bryan S. Graham

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: February 2002

Abstract

We add health and longevity to a standard model of life cycle saving and show that, under plausible assumptions, increases in longevity lead to higher savings rates at every age, even when retirement is endogenous. In a stable population these higher savings rates are offset by increased old age dependency, but during the disequilibrium phase, when longevity is rising, the effect on aggregate savings rates can be substantial. Our results explain the boom in savings in East Asia during 1950-90 as a combination of rising life expectancy and falling youth dependency, though they predict that savings in the region will return to more normal levels as populations age. We also find that falling life expectancies in Africa are associated with declining savings rates.

Suggested Citation

Bloom, David E. and Canning, Dave and Graham, Bryan S., Longevity and Life Cycle Savings (February 2002). NBER Working Paper No. w8808, Available at SSRN: https://ssrn.com/abstract=302569

David E. Bloom (Contact Author)

Harvard University - T.H. Chan School of Public Health ( email )

677 Huntington Avenue
Boston, MA MA 02115
United States
617-432-0654 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Dave Canning

Queen's University Belfast ( email )

Department of Economics
Belfast BT7 1NN
Northern Ireland
44-2890-273281 (Phone)

Bryan S. Graham

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
131
Abstract Views
2,843
Rank
392,634
PlumX Metrics