The specific aims are to investigate the adequacy and determinants of life insurance of American households. The data to be used in this study are the six waves of the Retirement History Survey and four SRI Consumer Financial Decisions surveys. The question of adequacy will be studied in two ways. First, we will conduct an extensive comparison of the economic situations of surviving spouses prior to and after the death of their spouses. Second, for couples in the data who do not experience the death of a spouse we will analyze how the hypothetical death of each spouse would have affected the economic position of the hypothetical surviving spouse. This analysis will provide the basis for estimating the fraction of elderly and middle age surviving spouses who fall below the poverty line as the apparent result of inadequate insurance protection. The empirical analysis of the determinants of the purchase of life insurance will include (1) estimating reduced forms suggested by a two period model of joint husband and wife insurance purchase, and (2) developing and estimating a multiperiod dynamic model of this joint decision. Of particular interest in this analysis is the extent to which the private purchase of life insurance responds to Social Security's provision of survivor insurance. Estimated coefficients of the models will be used to assess the extent to which Social Security is effective in increasing the total provision of life insurance to surviving spouses.
