INCREASE IN LIFE EXPECTANCY: IMPLICATIONS FOR CONSUMPTION – SAVING BEHAVIOR

Changes in population age structure and its economic consequences have become an issue of high importance in academic debate. In this paper the role of life expectancy as a variable having impact on individuals' behavior is assessed both theoretically and empirically. The aim of this article is first to provide a qualitative insight into the aspect of life expectancy together with its development over the past decades with further augmenting the discount factor by mortality impacting savings and consumption rates. Finally quantitative analysis is performed to assess the relationship between life expectancy at birth and real interest rate with discussion and conclusions drafted based on its results.