Working Paper: NBER ID: w8544
Authors: B. Douglas Bernheim; Katherine Grace Carman; Jagadeesh Gokhale; Laurence J. Kotlikoff
Abstract: Using the 1995 Survey of Consumer Finances and an elaborate life-cycle model, we quantify the potential financial impact of each individual's death on his or her survivors, and we measure the degree to which life insurance moderates these consequences. Life insurance is essentially uncorrelated with financial vulnerability at every stage of the life cycle. As a result, the impact of insurance among at-risk households is modest, and substantial uninsured vulnerabilities are widespread, particularly among younger couples. Roughly two-thirds of poverty among surviving women and more than one-third of poverty among surviving men results from a failure to insure survivors against an undiminished living standard. We also identify a systematic gender bias: for any given level of financial vulnerability, couples provide significantly more protection for wives than for husbands.
Keywords: No keywords provided
JEL Codes: D10; G22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| life insurance holdings (G52) | financial vulnerability (G32) |
| uninsured vulnerabilities (I13) | financial vulnerability (G32) |
| life insurance holdings (G52) | uninsured vulnerabilities (I13) |
| couples with severely at-risk wives (J12) | life insurance holdings (G52) |
| couples with severely at-risk husbands (J12) | life insurance holdings (G52) |
| life insurance holdings for severely at-risk wives (G52) | financial impact on husband's living standard (G59) |
| life insurance holdings for severely at-risk husbands (G52) | financial impact on wife's living standard (D14) |