A parsimonious model of subjective life expectancy

On average, “young” people underestimate whereas “old” people overestimate their chances to survive into the future. Such subjective survival beliefs violate the rational expectations paradigm and are also not in line with models of rational Bayesian learning. In order to explain these empirical patterns in a parsimonious manner, we assume that self-reported beliefs express likelihood insensitivity and can, therefore, be modeled as non-additive beliefs. In a next step we introduce a closed form model of Bayesian learning for non-additive beliefs which combines rational learning with psychological attitudes in the interpretation of information. Our model gives a remarkable fit to average subjective survival beliefs reported in the Health and Retirement Study.     

The value of changes in life expectancy

Valuation formulas for age-specific mortality risks are derived from life-cycle allocation theory under uncertainty and related to empirical estimates of the value of life. A change in an age-specific mortality risk affects all subsequent survivor functions and reallocates consumption and labor supply over the entire life cycle. The value of eliminating a risk to life at a specific age is the expected present value of consumer surplus from that age forward. Approximate numerical extrapolations from cross-section estimates imply that values decrease rapidly in current age and in the distance between current age and age at risk.     

Uncertain indemnity and the demand for insurance

This paper considers the demand for insurance in a model with uncertain indemnity. Uncertain indemnity tends to increase the demand for insurance for precautionary reasons, but it also tends to decrease the demand due to the risk created by indemnity uncertainty. When the coefficient of relative prudence is not too large, uncertain indemnity reduces the demand for insurance and partial coverage is optimal even at actuarially fair premiums. In addition, insurance may be an inferior good or a normal good, depending on the behavior of absolute risk aversion and the magnitude of the coefficient of relative risk aversion.     

Excluded losses and the demand for insurance

The demand for insurance is examined when the insured asset can incur losses that are excluded from insurance coverage. These losses are negatively correlated with covered losses and hence cannot be treated as background risk. Excluded losses have strikingly different effects on the demand for insurance than does background risk and lead to a modification of many standard insurance demand results. A number of new theorems concerning the effects of excluded losses are also presented. Risk-averse and prudent decision makers reduce their demand for insurance when excluded losses increase in size or riskiness. Excluded losses are a possible explanation for why many decision makers fail to take up insurance when it is offered.     

Ambiguous position of the child in supervised meetings

The paper addresses the ambiguous nature of supervised meetings between children and their non‐residential parent(s) which, according to the current legal idea, should serve the best interest of the child. In Finland the meetings between the child and the non‐residential parent can be ordered supervised if there are justified grounds for assuming that they constitute a risk for the child's safety. In many parts of Europe the need for such kinds of meetings controlled by outsiders has increased. The aim of the paper is to consider the child's position and the closely related issue of the child's interest in supervised meetings, based on the daily experiences of the supervisors. Data are gathered by focus group interviews and analysed qualitatively in terms of categorization analysis. As a result, the child's position is an ambiguous phenomenon with multiple interests. Obviously the child's interests will be met in some cases, although paradoxically it is mostly the interests of the parents and most often the fathers, which seem to demand more attention. Thus adult‐centredness, meanings of gender, time together with both the positive and possible detrimental outcomes for the child need further reflection.     

Longevity insurance annuities: China adopts a benefit innovation from the past

Longevity insurance annuities are deferred annuities that begin payment at advanced older ages, such as at age 80. Such annuities would benefit some older retirees who have drawn down their savings, but the private sector has problems in providing them. Originally, social insurance old‐age benefits programmes in some countries were structured as longevity insurance programmes, with 50 per cent or less of those entering the workforce surviving to receive the benefits. Over time, however, as life expectancy has improved, the benefits these programmes provide have slowly transformed into benefits that most people entering the workforce ultimately receive. This article argues that the reintroduction of longevity insurance benefits as part of social insurance old‐age benefit programmes could be an important policy innovation, in particular because this benefit is generally not provided by the private sector. China has introduced longevity insurance benefits as part of its social insurance system, offering a model for other countries, particularly those providing modest social insurance old‐age benefits.     

Understanding Ambiguous Loss in the Context of Dementia Care

Abstract

This study examined the experience of ambiguous loss for family members caring for a person with dementia living in a long-term care facility. Data for this study came from in-depth, active interviews conducted with 38 adult daughters and 23 adult sons caring for a parent with dementia living in a long-term care facility. The stories shared by the adult children revealed that ambiguous loss in the dementia context involves a long, on-going process of several phases including anticipatory loss, progressive loss and acknowledged loss. The nature of the ambiguity shifts and the experience changes for families as they journey through the ambiguous loss process. Acceptance and avoidance were the two most common coping strategies used in dealing with acknowledged loss.     

To be,or not to be,that is the question: An empirical study of the WTP for an increased life expectancy at an advanced age

This study reports an attempt to measure the value of an increased survival probability at advanced ages. It turns out that the average willingness to pay for a program which would increase the expected length of life by one year, conditional on having survived to the age of 75 years, is lower than $1,500. The willingness to pay increases with a person's age, but at a low and seemingly constant rate (1–4 percent per year).     

Loss volatility,bankruptcy, and the demand for reinsurance

Insurers in our model reinsure to lower the risk of bankruptcy. In the conceptual part of the study, we show that given bankruptcy cost, reinsurance may be demanded even if the insurer is risk-neutral. The model allows us to assess how the insurer's surplus, size, and volatility of losses affect the amount of reinsurance the insurer purchases. As predicted by our comparative statics analysis, we find empirically that property/casualty and medical malpractice insurers with higher prereinsurance loss volatility, lower surplus-to-premium ratios, and smaller sizes demand more reinsurance.     

A Diamond-Stiglitz approach to the demand for self-protection

The existing research concerning the relationship between risk aversion and prudence and the demand for self-protection assumes that the loss variable follows a Bernoulli distribution, and that changes in the level of self-protection are mean preserving. The analysis here replaces these two very strong conditions with ones which are more general. When doing this, the method of analysis is also significantly modified. This modification includes representing a change in the level of self-protection using the procedure developed by Diamond and Stiglitz (Journal of Economic Theory 8:337-360, 1974) for representing a change in risk. This alternate representation allows the existing findings to be generalized considerably, and also simplifies the analysis.     

Children's Interpretation of Ambiguous Behavior: Evidence for a 'Boys are Bad' Bias

Possible gender-related evaluative biases were investigated among a group of 64 second and third graders (ages 6 y 11 m to 9 y 7 m). Participants were shown photographs of 8 unfamiliar children, and were told that each had performed a particular behavior. Each of the behaviors was consistent with multiple interpretations, including a positive interpretation and a negative interpretation. When the unfamiliar peers were male, participants were more likely to remember behaviors in unfavorable ways and to select more negative attributions for the behavior. This pattern of results held even among male participants, who reported greater expectations of liking the male peers.     

Decriminalization of marijuana and the demand for alcohol, marijuana and cocaine

This study examines whether the decriminalization of marijuana in eleven states has affected self-reported usage of drugs. Generally, decriminalization is not found to significantly impact drug use. An implication is that the demand for drugs is highly inelastic with respect to incremental changes in the legal sanctions for possession of small amounts of marijuana.     

Estimating the demand for risky assets via the indirect expected utility function

This article obtains demand functions for risky assets without making a priori assumptions about the form of the utility function. In a simple portfolio model, the envelope theorem is applied to the indirect expected utility function to derive estimating equations. Tests for the existence of constant absolute or constant relative risk aversion are also developed. Empirical estimation of the demand for financial assets held by U.S. households for the period 1946–1985 indicates that aggregate household behavior is consistent with the existence of constant relative risk aversion, with the coefficient of risk aversion having a value of approximately 1.3.The authors gratefully acknowledge helpful comments from the editor and an anonymous referee.     

Political demand and policy advice: a framework for analysis

ABSTRACT

In the policy advice literature, there has been two main “waves” of research focus. In the first wave, the focus of scholarly attention tended to focus on single policy advice actors. A key innovation was offered by Halligan, who sought to frame policy advice within a policy advisory system, with a focus on government control and location. In later research, Craft and Wilder called for a “second wave” of research which also sought to integrate factors such as policy content, context, ideational compatibility but also reflect the increasingly polycentric advice landscape. This article contributes to the second wave drawing attention to a key element of the institutional dynamics of policy advice systems, namely the issue of political “demand”. A core argument offered in this article is that the dynamics of demand need to be interrogated more fully, and be given greater prominence in current understandings of PAS dynamics. The net effect of marginalizing “demand” factors is that it can de-politicize the extent and nature of advice-giving, and reduce it to a seeming technocratic exchange. To expand our understanding of demand, this paper offers a framework for understanding the dynamics of demand within policy advice systems.     

Inflation and aggregate demand shocks

This paper derives and estimates a small general equilibrium model under the assumptions of imperfect competition and translog technology to simulate the impact of shifts in aggregate demand on prices. The simulations suggest that demand expansions are deflationary. This result challenges the common perception that the dynamic aggregate supply schedule is upward sloping.     

Dreams for the second half of life

Dreams in midlife and old age can reveal a process of spiritual growth described by Tornstam as gerotranscencence. This same process of inner growth has also been described in theoretical terms as self-actualization (Maslow), ego-integrity (Erikson), and individuation (Jung). The process is illustrated through dream symbols of transpersonal development, displaying the duality of self-fulfillment and self- transcendence. In lifespan development terms this process can be studied in detail in the autobiography of Helen Luke. The interpretation of dreams has importance for what has recently come to be known as Conscious Aging.