Self-insurance and saving under a two-argument utility framework

초록

This study analyses self-insurance and saving decisions in a two-period model when the utility function depends on income and health. In this study, we consider an intertemporal and multi-dimensional cost-benefit structure of self-insurance and saving, unlike in the standard one-argument utility model. We show that the impacts of the changes in initial income and health on self-insurance and saving depend on whether an individual is correlation averse or not, the comparison between the absolute risk aversion and the absolute correlation aversion, and the comparison between the income effect and the substitution effect. We also show that self-insurance and saving can be either complements or substitutes.

키워드