Medical Spending, Bequests, and Asset Dynamics Around the Time of Death

23 Pages Posted: 23 Mar 2020 Last revised: 29 Apr 2020

See all articles by John Bailey Jones

John Bailey Jones

Federal Reserve Bank of Richmond; SUNY at Albany - School of Business

Mariacristina De Nardi

University College London, Economics Dpt.; Federal Reserve Bank of Chicago; National Bureau of Economic Research (NBER) - Public Economics

Eric French

Department of Economics; Institute for Fiscal Studies (IFS)

Rory McGee

University College London - Drayton House

Rachel Rodgers

Northeastern University

Date Written: March 2020

Abstract

Using data from the Health and Retirement Survey, we document the changes in assets that occur before a person's death. Applying an event study approach, we find that during the 6 years preceding their deaths, the assets of single decedents decline, relative to those of similar single survivors, by an additional $20,000 on average. Over the same time span, the assets of couples who lose a spouse fall, relative to those of similar surviving couples, by an additional $90,000 on average. Households experiencing a death also incur higher out-of-pocket medical spending and other end-of-life expenses. This elevated spending is sufficient to explain (in accounting terms) the asset declines observed for singles but falls short of explaining the declines observed for couples. Bequests from the dying spouse to non-spousal heirs such as children are more than sufficient to explain the remainder.

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Suggested Citation

Jones, John B. and De Nardi, Mariacristina and French, Eric and McGee, Rory and Rodgers, Rachel, Medical Spending, Bequests, and Asset Dynamics Around the Time of Death (March 2020). NBER Working Paper No. w26879, Available at SSRN: https://ssrn.com/abstract=3559168

John B. Jones (Contact Author)

Federal Reserve Bank of Richmond ( email )

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Mariacristina De Nardi

University College London, Economics Dpt. ( email )

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Eric French

Department of Economics ( email )

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Rory McGee

University College London - Drayton House ( email )

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Rachel Rodgers

Northeastern University ( email )

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