Data and Code for: "Old Age Risks, Consumption, and Insurance"

In the U.S, after age 65, households face income and health risksand a large fraction of these risks are transitory. While consumptionsignificantly responds to transitory income shocks, outof-pocket medical expenses do not. In contrast, both consumptionand out-of-pocket medical expenses respond to transitory healthshocks. Thus, most U.S. elderly keep their out-of-pocket medicalexpenses close to a satiation point that varies with health. Consumptionresponds to health shocks mostly because adverse healthshocks reduce the marginal utility of consumption. The effect ofhealth on marginal utility changes the optimal transfers due tohealth shocks.