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on Economics of Ageing |
| By: | Qi Li (University of Chicago); Juan Pantano (Washington University in St. Louis); Daifeng He (College of William and Mary); Maria Casanova (UCLA) |
| Abstract: | The Social Security Administration computes individual pension benefits using the average survival in the population. However, less educated individuals, and those with lower lifetime incomes, have lower life expectancies than their more educated and richer counterparts. We investigate how heterogeneity in longevity interacts with homogenous social security rules in shaping retirement patterns. In particular, the increase in Social Security benefits for each additional year of work after early retirement age is approximately actuarially fair for individuals with the average longevity. Thus, it is less than actuarially fair for individuals whose life expectancy is lower than average. As a result, individuals with below-average longevity have lower incentives to delay retirement past early retirement age. We estimate a structural dynamic programming model of retirement using microdata from the Health and Retirement Study. We then use the estimated model to simulate retirement behavior under a counterfactual social security system in which individual specific survival odds are used to compute individual benefits. This allow us to investigate the role of actuarial unfairness plays in shaping the observed patterns of early retirement. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed014:824&r=age |
| By: | Courtney Coile |
| Abstract: | A rising share of older workers in the U.S. make use of the Disability Insurance (DI) program in their transition to retirement, with about one in seven men and one in nine women ages 60 to 64 now enrolled in the program. This study explores how financial incentives from Social Security and DI affect retirement decisions, using an option value approach. We find that financial incentives have a significant effect on retirement, particularly for those in poor health or with low education, who may be more actively considering retirement at younger ages. Simulations suggest that increasing the stringency of the screening process for DI would increase the expected working life of DI applicants. |
| JEL: | J14 J26 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20916&r=age |
| By: | Darwin Cortés; Darío Maldonado; Giselle Vesga |
| Abstract: | Abstract: We analyze the effect of a parametric reform of the fully-funded pension regime in Colombia on the intensive margin of the labor supply. We take advantage of a threshold defined by law in order to identify the causal effect using a regression discontinuity design. We find that a pension system that increases retirement age and the minimum weeks during which workers must contribute to claim pension benefits causes an increase of around 2 hours on the number of weekly worked hours; this corresponds to 4% of the average number of weekly worked hours or around 14% of a standard deviation of weekly worked hours. The effect is robust to different specifications, polynomial orders and sample sizes. |
| Keywords: | Labor supply, Regression discontinuity, pension system reform, Colombia |
| JEL: | D91 J26 |
| Date: | 2015–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:012476&r=age |
| By: | Creedy, John; Gemmell, Norman; Scobie, Grant |
| Abstract: | The objective of the paper is to explore the saving and consumption responses of a representative household to a range of policy interventions such as changes in taxes and pension settings. To achieve this, it develops a two-period life-cycle model. The representative household maximises lifetime utility through its choice of optimal levels of consumption, housing and saving. A key feature of the approach is modelling the consumption of housing services as a separate good in retirement along with the implications for saving. Importantly, the model incorporates a government budget constraint involving a pay-as-you-go universal pension. In addition, the model allows for a compulsory private retirement savings scheme. Particular attention in the simulations is given to the potential impact on household saving rates of a range of policy changes. Typically the effect on saving rates is modest. In most instances, it would take very substantial changes in existing policy settings to induce significant increases in household saving rates. |
| Keywords: | Savings, Housing, Retirement, Intertemporal elasticity of substitution, Rate of interest, Taxation, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwcpf:3763&r=age |
| By: | Marco Francesconi; Robert A. Pollak; Domenico Tabasso |
| Abstract: | Using data from the Health and Retirement Study (HRS), we make two contributions to the literature on end-of-life transfers. First, we show that unequal bequests are much more common than generally recognized, with one-third of parents with wills planning to divide their estates unequally among their children. These plans for unequal division are particularly concentrated in complex families, that is, families with stepchildren and families with genetic children with whom the parent has had no contact (e.g., children from previous marriages). We find that in complex families past and current contact between parents and children reduces or eliminates unequal bequests. Second, although the literature focuses on the bequest intentions of parents who have made wills, we find that many elderly Americans have not made wills. Although the probability of having a will increases with age, 30 percent of HRS respondents aged 70 and over have no wills. Of HRS respondents who died between 1995 and 2010, 38 percent died intestate (i.e., without wills). Thus, focusing exclusively on the bequest intentions of parents who have made wills provides an incomplete and misleading picture of end-of-life transfers. |
| Keywords: | Bequests, intergenerational transfers, altruism, exchange, evolutionary motives, family structure |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:gen:geneem:15013&r=age |
| By: | France Weaver; Judite Goncalves; Valerie-Anne Ryser |
| Abstract: | Although there is a growing interest in subjective well-being (SWB) and its determinants, the extent of socioeconomic inequalities in SWB has not yet been analyzed. This study assesses socioeconomic inequalities in SWB in twelve European countries and the United States (US), by estimating concentration indices. They are then decomposed to document how individual income, relative income (i.e. how individual income compares to those of peers), individual health, and relative health contribute to these inequalities. The analysis focuses on the population aged 50 and over, using data from the ‘Survey of Health, Ageing, and Retirement in Europe’ and the ‘Health and Retirement Study’ for the US. All countries display some socioeconomic inequalities in SWB, with SWB being concentrated among individuals with higher socioeconomic status. Of the countries studied, the Netherlands and Belgium have the lowest socioeconomic inequalities in SWB, while Poland and the Czech Republic have the highest. The US has significantly higher inequalities than the former and significantly lower inequalities than the latter countries. The decomposition reveals that individual and relative health contribute largely to these inequalities in all countries. In contrast, individual and relative income matter in some countries, such as the US, and not in others, for example Spain. These results indicate that attention needs to be paid to socioeconomic inequalities in SWB of the baby boomers and elderly population and that, in most countries, policies focusing on health would be more effective at reducing them than targeting income. |
| Keywords: | Socioeconomic inequalities, subjective well-being, income, health |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:gen:geneem:15011&r=age |
| By: | Ulises García Repetto (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | The Uruguayan pension system has been recorded as one of the most advanced in the region, being a pillar of the protection policies of the country. However, the financial crisis of the system and the discussions about the cost of social security has been a constant in the national debate. In this analyze the process of capitalization of pension funds in Uruguay during the period of 1943 and 1967, by the process known as "empapelamiento" (or “wallpapering”). This episode contributed, together with other causes (aging population, the falling real purchasing power of wages, deterioration of the quality of employment, etc.) in the reforms of 1979 and 1996. In addition, it’s an important process due to the role of the State to accelerate the underfunding and its impact on fiscal sustainability of the Central Government, during the period of consolidation and rise of the welfare system that characterized this period of the industrialization by substitution of imports. It is known as "empapelamiento" (or “wallpapering”) the mechanism by which the State placed a high percentage of Public Debt with fixed interest rate on pension funds. The problem arises in the mid-fifties when the economy enters an inflationary process. In this scenario the general rise in prices, the Public Debt not indexed and limited investment option permitted by law, led to the evaporation of savings in few years. That meant that afterwards during the seventies the public social security system will be deficient and became a heavy burden for the State finances. |
| Keywords: | social security, pension funds, underfunding, inflation |
| JEL: | N1 N16 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ulr:wpaper:dt-23-14&r=age |
| By: | Alicia H. Munnell; Anthony Webb |
| Abstract: | The brief’s key findings are: *As 401(k)s and IRAs have become the dominant source of retirement saving, the potential for pre-retirement withdrawals – “leakages” – has grown. *Leakages occur via three channels: 1) in-service withdrawals for hardships or after age 59½; 2) cashouts when individuals leave a job; and 3) loans. *Estimates indicate that about 1.5 percent of assets leaks out of 401(k)s/IRAs each year, reducing wealth at retirement by about 25 percent. *Given the size of leakages, it may be time to take steps to curtail them such as: *limiting hardship withdrawals to unpredictable events *raising the age for penalty-free withdrawals to better align with when people actually retire; and *closing down cashouts by requiring the money to stay in the 401(k) system or be rolled over into an IRA. |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2015-2&r=age |
| By: | Johanna Catherine Maclean (Department of Economics, Temple University); Asia Sikora Kessler (Department of Health Promotion, Social and Economic Behavioral Health, University of Nebraska Medical Center) |
| Abstract: | A large literature has examined the healthcare consequences of obesity. A major barrier to careful study of these consequences is reliance on self-reported measures of weight and height. Previous research has developed algorithms to adjust for such error among working age adults. In this study we consider elderly adults, a group likely to differ in reporting error patterns from working age adults due to involuntary weight loss and changes in cognition, muscle mass, and bone density. We first provide evidence on the degree and type of reporting error in this population. Second, we consider how well standard approaches to adjusting for such error preform in an elderly population in terms of estimating obesity prevalence and regression coefficients. These findings have direct implications for evaluating anti-obesity programs among the elderly and estimating the obesity-related healthcosts to the Medicare program. |
| Keywords: | Healthcare costs, Medicare, reporting error, validation data, weight, height, obesity, elderly adults |
| JEL: | I1 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:tem:wpaper:1501&r=age |
| By: | Casper Worm Hansen (Department of Economics, Copenhagen University); Holger Strulik (University of Goettingen, Department of Economics) |
| Abstract: | In this study we investigate the causal impact of increasing adult longevity on higher education. We exploit the fourth stage of the epidemiological transition, i.e. the unexpected decline of deaths from heart attack and stroke in the 1970s as a large positive health shock that affected predominantly old age mortality. Using a differences-in-differences estimation strategy we find across U.S. states that the cardiovascular revolution led to an increase in adult life expectancy by about 2 years, which caused higher education enrollment to increase by 7 percentage points, i.e. 30 percent of the observed increase from 1970 to 2000. Our findings are robust to the inclusion of state-specific health trends and a host of confounding variables. They suggest large effects of improving longevity on higher education enrollment. |
| Keywords: | adult life expectancy, higher education, cardiovascular diseases, 2SLS strategy, dierences-in-differences first-stage. |
| JEL: | I15 J24 N30 O10 O40 |
| Date: | 2015–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1501&r=age |
| By: | Alan Barber; Dean Baker |
| Abstract: | This issue brief presents the scheduled Social Security benefit for each current member of the Senate. The issue brief is intended to inform Senators -- and the general public -- about Social Security and, assuming no changes to current policy, demonstrate that it will pay full benefits through 2030 and roughly 75 percent of benefits from 2031 on. |
| Keywords: | social security, social security cap, earnings, senators |
| JEL: | H H5 H55 H2 H3 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2015-03&r=age |
| By: | Mikko Packalen; Jay Bhattacharya |
| Abstract: | Older scientists are often seen as less open to new ideas than younger scientists. We put this assertion to an empirical test. Using a measure of new ideas derived from the text of nearly all biomedical scientific articles published since 1946, we compare the tendency of younger and older researchers to try out new ideas in their work. We find that papers published in biomedicine by younger researchers are more likely to build on new ideas. Collaboration with a more experienced researcher matters as well. Papers with a young first author and a more experienced last author are more likely to try out newer ideas than papers published by other team configurations. Given the crucial role that the trying out of new ideas plays in the advancement of science, our results buttress the importance of funding scientific work by young researchers. |
| JEL: | I1 J11 O31 O32 O33 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20920&r=age |
| By: | Eleftheria Vellidou (VIDAVO S.A., Thessaloniki, Greece); Markela Psymarnou (VIDAVO S.A., Thessaloniki, Greece) |
| Abstract: | Since 2004, the office for the development of eGovernment services of the Trikala municipality (henceforth eTrikala Office) has been promoting new broadband technologies and the implementation of ICT projects for the municipality. On 8 April 2008 this office became a start up company, eTrikala S.A. The municipality of Trikala the majority shareholder owning 99% of the share capital, and the remaining 1% is owned by the local Chambers of Commerce. The first service to be implemented by eTrikala S.A. was a Telehealth centre in the municipality. Up until 2010, the centre provided telemonitoring services to chronic patients suffering from the following chronic diseases: diabetes type II, chronic heart failure, and COPD. Patients were equipped with light-weight handheld devices and could record their vital signs at home. The data recorded was periodically transferred to the municipality hospital and private physicians over the internet or GPRS for review and feedback by doctors via the telehealth centre. In 2010, the eTrikala telemonitoring services were also extended to the older population suffering from mild cognitive impairment. The service was discontinued in 2013 due to the lack of specialised health care professionals (e.g. psychologists) needed to provide advice and assistance to the home-telemonitored patients. |
| Keywords: | SIMPHS, eHealth, Remote Monitoring, ageing, integrated care, independent living, case studies, facilitators, governance, impact, drivers, barriers, integration, organisation |
| JEL: | I11 I18 O33 O38 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc93830&r=age |
| By: | Vincenzo Rebba (University of Padova) |
| Abstract: | Over the past thirty years, health expenditure has grown at a faster rate than the economy in almost every OECD country. The main drivers of public health spending are income growth, insurance coverage, demographics, and, above all, technological change. According to the projections of the major international institutions (European Commission, OECD, International Monetary Fund), public health spending for the of EU-15 countries could significantly increase by 2050. These projections vary in an extremely wide range, between +27% and +84%, depending on the assumptions made. However, the big challenge will be the growth of public spending on long-term care which could more than double over the 2010-2050 period, owing to the sharp rise of frailty and disability at older ages, especially amongst the very old (aged 80+) which will be the fastest growing segment of the EU population in the decades to come. The European countries are facing a common challenge: the need to secure the economic and financial sustainability of their health care systems without undermining the values of universal coverage and solidarity in financing. Command and control policies aimed at expenditure restraints and largely operating through regulatory controls (controls over inputs and wages, budget caps, etc.) are widely used during periods of recession. They can hold expenditures down in the short term. However, they do little or nothing to moderate the underlying pressures which push health spending up over the long-run. Other policies to guarantee both economic and financial sustainability in the long-run should be explored: 1) the adoption of new regulation tools on supply and demand side; 2) a new balanced mix of public and private financing, strengthening the role of supplementary private health insurance, to allow investment and innovation, without imposing unsustainable burdens on public budgets and without denying care to the disadvantaged. The former policies focus on economic sustainability, improving the way health systems address the rise in chronic disease and seek to incentive and reward patients, providers and buyers for healthy behaviour, quality and efficiency of care. The latter policies could ensure long-term financial stability of the health care systems but may determine negative effects in terms of equity and, therefore, they must be carefully designed. |
| Keywords: | health care expenditure; health care systems; projection models; sustainability; health care policy. |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0191&r=age |