Pascal St-Amour

Health and (Other) Asset Holdings

Despite clear evidence of correlations between financial and medical statuses and decisions, most models treat financial and health-related choices separately. This paper bridges this gap by proposing a tractable dynamic framework for the joint determination of optimal consumption, portfolio holdings, health investment and health insurance. We solve for the optimal rules in closed form and capitalize on this tractability to gain a better understanding of the conditions under which separation between financial and health-related decisions is sensible, and of the pathways through which wealth and health determine allocations, welfare and other variables of interest such as expected longevity or the value of health. Furthermore we show that the model is consistent with the observed patterns of individual allocations and provide realistic estimates of the parameters that confirm the relevance of all the main characteristics of the model.

Substitution, risk aversion, taste shocks and equity premia

This paper investigates the testable restrictions on the time-series behavior of equity premia implied by a representative agent model whose state and time-non-separable preferences are subject to taste shocks. The model nests state and time-separable preferences with and without taste shocks as special cases.

Asymmetric Information and Adverse Selection in Mauritian Slave Auctions

Information asymmetry is a necessary prerequisite for testing adverse selection. This paper applies this sequence of tests to Mauritian slave auctions. The theory of dynamic auctions with private and common values suggests that when an informed participant is known to be active, uninformed bidders will be more aggressive and the selling price will be higher. We conjecture that observable family links between buyer and seller entailed superior information and find a strong price premium when a related buyer purchased a slave, indicative of information asymmetry. We then test for adverse selection using sale motivation. Our results indicate large discounts on voluntary as compared to involuntary sales. Consistent with adverse selection, the market anticipated that predominantly low-productivity slaves would be brought to the market in voluntary sales. Copyright 2009, Wiley-Blackwell.

Slave prices from succession and bankruptcy sales in Mauritius, 1825–1827

We construct a unique data set from succession and bankruptcy sales in Mauritius to investigate the determinants of slave prices between 1825 and 1827. We find that males, females sold with children, skilled slaves and slaves sold during the peak sugar cane harvest season all fetched higher prices. In comparison, handicapped and non-native slaves were sold at a discount. Moreover, the young-children premium increased over the period. This may indicate that slave owners did not think that slavery would be abolished in the near future or thought that they would be compensated in such an event.

Life cycle responses to health insurance status

This paper studies the lifetime effects of exogenous changes in health insurance coverage (e.g. Medicare, PPACA, termination of employer-provided plans) on the dynamic optimal allocation (consumption, leisure, health expenditures), status (health and wealth), and welfare. We solve, simulate, and structurally estimate a parsimonious life cycle model with endogenous exposure to morbidity and mortality risks, and exogenous health insurance. By varying coverage, we identify the marginal effects of insurance when young and/or when old on allocations, statuses, and welfare. Our results highlight positive effects of insurance on health, wealth and welfare, as well as mid-life substitution away from healthy leisure in favor of more health expenses, caused by peaking wages, and accelerating health issues.

Recursive measures of total wealth and portfolio return

This paper presents and assesses a procedure to generate recursive measures of aggregate total wealth and portfolio return. The procedure is more flexible and yields more realistic measures, compared to the classical replacement cost and present value methods.

Valuing Life as an Asset, as a Statistic and at Gunpoint

The Human Capital (HK) and Statistical Life Values (VSL) differ sharply in their empirical pricing of a human life and lack a common theoretical background to justify these differences. We first contribute to the theory and measurement of life value by providing a unified framework to formally define and relate the Hicksian willingness to pay (WTP) to avoid changes in death risks, the HK and the VSL. Second, we use this setting to introduce an alternative life value calculated at Gunpoint (GPV), i.e. the WTP to avoid certain, instantaneous death. Third, we associate a flexible human capital model to the common framework to characterize the WTP and the three life valuations in closed-form. Fourth, our structural estimates of these solutions yield mean life values of 8.35 M

Joint Lifetime Financial, Work and Health Decisions: Thrifty and Healthy Enough for the Long Run?

(VSL), 421 K

Human Capital and Employment Risks Diversification

(HK) and 447 K

Adverse Selection in the Market for Slaves in Mauritius, 1825-1835

(GPV). We con firm that the strong curvature of the WTP and the linear projection hypothesis of the VSL explain why the latter is much larger than other values.