TABLE OF CONTENTS
Introduction - David A. Wise, Richard Woodbury
DOI: 10.7208/chicago/9780226146126.003.0001
[aging, economics, health measurement, health trends, financial circumstances, personal lives, wellbeing, innovation, intervention, public policy]
The introduction summarizes the 12 economics of aging studies that follow, and how they fit together as part of a larger research agenda. The introduction begins by developing an organizational template for relating the causes, characteristics and consequences of health. It then describes the key motivations, research questions, and results of the 12 studies in this more integrated organizational context. The first three chapters of the volume deal with health measurement and health trends. Chapters 4 and 5 look at the relationships and causal interactions between health and financial circumstances. The next four chapters in the volume consider how other aspects of people's lives affect their health. The last three chapters in the volume look at the potential for innovations, interventions and public policies to improve health and financial wellbeing. (pages 1 - 18)
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1Evidence for Significant Compression of Morbidity in the Elderly US Population - David M. Cutler, Kaushik Ghosh, Mary Beth Landrum
DOI: 10.7208/chicago/9780226146126.003.0002
[morbidity, compression, medical spending, life extension, Medicare Current Beneficiary Survey, functional measures, disability, survival]
The question of whether morbidity is being compressed into the period just before death has been at the center of health debates in the United States for some time. Compression of morbidity would lead to longer life but less rapid medical spending increases than if life extension were accompanied by expanding morbidity. Using nearly 20 years of data from the Medicare Current Beneficiary Survey, we examine how health is changing by time period until death. We show that functional measures of health are improving, and more so the farther away from death the person is surveyed. Disease rates are relatively constant at all times until death. On net, there is strong evidence for compression of morbidity based on measured disability, but less clear evidence based on disease-free survival. (pages 21 - 80)
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The Lifetime Risk of Nursing Home Use - Michael D. Hurd, Pierre-Carl Michaud, Susann Rohwedder
DOI: 10.7208/chicago/9780226146126.003.0003
[nursing home, Health and Retirement Study, parametric, nonparametric, lifetime exposure, exit interviews, lifetime risk]
This paper estimates the lifetime risk and distribution of stays in nursing homes using 10 waves of data from the Health and Retirement Study covering the population over the age of 50. Using both nonparametric and parametric approaches which account for censoring, we estimate that a 50 year old has a 53% to 59% chance of ever entering a nursing home before he dies and that, conditional on any stay, the average duration is just over a year. We show that stays at the end of life which are typically not captured in core interviews are very important for assessing lifetime exposure. The HRS performs exit interviews with proxies for those who died. Excluding exit interviews yields lifetime risk under 40%. Being female, white and a nonsmoker are associated with higher lifetime risk due to lower (competing) mortality risk and higher nursing home risk at older ages. (pages 81 - 114)
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A Comparison of Different Measures of Health and Their Relation to Labor Force Transitions at Older Ages - Arie Kapteyn, Erik Meijer
DOI: 10.7208/chicago/9780226146126.003.0004
[Survey of Health, Ageing and Retirement in Europe, health indexes, regression models, labor force transition, kurtosis, skewness, transition into retirement, older age]
We discuss three indexes of health that have been discussed in the literature and compare their theoretical and empirical properties, using data from the Survey of Health, Ageing and Retirement in Europe. We then estimate regression models for labor force transitions at older ages and investigate the consequences of using different measures of health. The measures differ both in the underlying statistical model and in the variables included in them. A comparison of distributional properties exhibits marked differences in kurtosis and skewness, while the correlation between the measures is modest. When using the health indexes to explain transitions into retirement, their explanatory power does not appear to vary much. However when explaining transitions into disability the index described by Poterba, Venti, and Wise (2011, 2013) provides a better fit than the competing indexes. It appears that this is mainly due to the variables included in the Poterba, Venti, and Wise index, such as health conditions and health care utilization variables, which are either wholly or partly missing from the other indexes. (pages 115 - 156)
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The Nexus of Social Security Benefits, Health, and Wealth at Death - James M. Poterba, Steven F. Venti, David A. Wise
DOI: 10.7208/chicago/9780226146126.003.0005
[Social Security, low earnings, labor force, retirement, low assets, poor health, nonannuity assets, Asset and Health Dynamics Among the Oldest Old, Aging and Health in America, AHEAD]
Social Security (SS) benefits are the most important component of the income of a large fraction of older Americans. A significant fraction approach later life relying heavily on SS benefits. Persons in poor health in old age have a higher-than-average probability of having experienced low earnings while in the labor force, increasing the risk of having low SS benefits in retirement. While the progressivity of the SS benefit formula provides a safety net to support low-wage workers in retirement, a noticeable fraction still have income below the poverty level in their last years. In general, low assets and low income in old age are strongly related to poor health. We explore this nexus and describe the relationship between SS benefits and the exhaustion of nonannuity assets near the end of life. We examine the relationship between the drawdown of assets between the first year an individual is observed in the AHEAD data (1995) and the last year that individual is observed before death, and that individual's health, SS benefits, and other annuity benefits. SS and defined benefit pension benefits are strongly “protective” of nonannuity assets, with a negative relationship between these income flows and the likelihood of exhausting nonannuity assets. (pages 159 - 186)
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Understanding the SES Gradient in Health among the Elderly - Till Stowasser, Florian Heiss, Daniel McFadden, Joachim Winter
DOI: 10.7208/chicago/9780226146126.003.0006
[socioeconomic status, health status, absence of casual channels, Granger causality sense, early childhood, gender differences, SES]
Individuals’ socioeconomic status (SES) is positively correlated with their health status. While the existence of this gradient may be uncontroversial, the same cannot be said about its explanation. In this paper, we extend the approach of testing for the absence of causal channels developed by Adams et al. (2003), which in a Granger causality sense promises insights on the causal structure of the health-SES nexus. We introduce some methodological refinements and integrate retrospective survey data on early childhood circumstances into this framework. We confirm that childhood health has lasting predictive power for adult health. We also uncover strong gender differences in the intertemporal transmission of SES and health: While the link between SES and functional as well as mental health among men appears to be established rather late in life, the gradient among women seems to originate from childhood circumstances. (pages 187 - 222)
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Early Retirement, Mental Health, and Social Networks - Axel Börsch-Supan, Morten Schuth
DOI: 10.7208/chicago/9780226146126.003.0007
[early retirement, mental health, social networks, cognitive decline, social contacts]
This paper explores the interrelationships between early retirement, mental health—especially cognition—and the size and composition of social networks among older people. While early retirement enables more leisure and relieves stressful job conditions, it also accelerates cognitive decline. We argue in this paper that part of this accelerated cognitive ageing occurs because social networks shrink especially after early retirement. Social contacts are a side effect of employment that keeps workers mentally agile. Social contacts, especially with friends, however, decline gradually after retirement, with an acceleration effect when retirement was early. The paper therefore puts some shade on the popular notion that early retirement is bliss. (pages 225 - 254)
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Spousal Health Effects - James Banks, Elaine Kelly, James P. Smith
DOI: 10.7208/chicago/9780226146126.003.0008
[spousal health effects, smoking behavior, drinking behavior, exercise behavior, positive assortative mating, asymmetric partner influence, postmarital influence]
In this paper, we investigate the issue of partner selection in the health of individuals who are at least fifty years old in England and the United States. We find a strong and positive association in family background variables including education of partners and their parents. Adult health behaviors such as smoking, drinking, and exercise are more positively associated in England compared to the United States. Childhood health indicators are also positively associated across partners. We also investigated pre and post partnership smoking behavior of couples. There exists strong positive assortative mating in smoking in that smokers are much more likely to partner with smokers and nonsmokers with nonsmokers. This relationship is far stronger in England compared to the United States. In the United States, we find evidence of asymmetric partner influence in smoking in that men's pre marriage smoking behavior influences his female partner's post marriage smoking behavior but there does not appear to be a parallel influence of women's premarriage smoking on their male partner's postmarital smoking. These relationships are much more parallel across genders in England. (pages 255 - 282)
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Grandpa and the Snapper - Angus Deaton, Arthur A. Stone
DOI: 10.7208/chicago/9780226146126.003.0009
[living with a child, poor health, life evaluation, enhanced negative emotions, enhanced positive emotions, lower life evaluations, demographic transition]
Elderly Americans who live with people under age 18 have lower life evaluations than those who do not. They also experience worse emotional outcomes, including less happiness and enjoyment, and more stress, worry, and anger. In part, these negative outcomes come from selection into living with a child, especially selection on poor health, which is associated with worse outcomes irrespective of living conditions. Even with controls, the elderly who live with children do worse. This is in sharp contrast to younger adults who live with children, likely their own, whose life evaluation is no different in the presence of the child once background conditions are controlled for. Parents, like elders, have enhanced negative emotions in the presence of a child, but unlike elders, also have enhanced positive emotions. In parts of the world where fertility rates are higher, the elderly do not appear to have lower life evaluations when they live with children; such living arrangements are more usual, and the selection into them is less negative. They also share with younger adults the enhanced positive and negative emotions that come with children. The misery of the elderly living with children is one of the prices of the demographic transition. (pages 283 - 304)
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Expectations, Aging, and Cognitive Decline - Gábor Kézdi, Robert J. Willis
DOI: 10.7208/chicago/9780226146126.003.0010
[expectations with respect to aging, survival expectations, cognitive decline, decline of optimism with age, increase in uncertainty]
We use longitudinal data from the HRS to document general patterns in expectations with respect to aging in various domains and investigate the potential role of cognitive decline in those patterns. We focus on two aspects of expectations: optimism and uncertainty. We estimate the effect of age controlling for cohort, selection and calendar time effects. With the notable exception of survival expectations, we find that optimism decreases with age in most domains. Uncertainty appears to increase with age in most cases except for survival expectations, but these findings are less robust. Using methods that minimize the likelihood of spurious associations due to survey noise, we show that cognitive decline plays a modest but statistically significant role in explaining the decline of optimism with age, again, with the exception of survival expectations. We do not find a role for cognitive decline in accounting for the increase in uncertainty. (pages 305 - 340)
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Nutrition, Iron Deficiency Anemia, and the Demand for IronFortified SaltEvidence from an Experiment in Rural Bihar - Abhijit Banerjee, Sharon Barnhardt, Esther Duflo
DOI: 10.7208/chicago/9780226146126.003.0011
[iron deficiency anemia, IDA, double fortified salt, DFS, micronutrient deficiency, supplemental iron]
Iron deficiency anemia (IDA) is frequent among the poor worldwide. While it can be prevented with supplements or food fortification, these programs often do not reach the poorest. Further, little is known about the impact of treating iron deficiency anemia on productivity. This paper is the first of a larger project that investigates the feasibility and the impact of addressing IDA through partly subsidized double fortified salt (DFS)—salt fortified with iron and iodine—in rural Bihar. Analysis of a baseline survey in 400 villages suggests that anemia is prevalent (over 50% of adult women are anemic) and is correlated with lower physical and cognitive fitness at all ages. This is despite the fact that consumption per capita is not particularly low by the standards of rural India (INR 56 per capita per day), and average BMI is not very low, indicating that overall caloric intake must be adequate. This suggests that micronutrient deficiency is likely playing a key role. Almost all households purchase salt, which makes DFS a possible channel to distribute supplemental iron. A randomized pricing experiment suggests that subsidizing DFS by about 55% led to fairly large take-up, even without a detailed information campaign. (pages 343 - 388)
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11The Diffusion of NewMedical TechnologyThe Case of Drug-Eluting Stents - Amitabh Chandra, David Malenka, Jonathan Skinner
DOI: 10.7208/chicago/9780226146126.003.0012
[medical technology, bare-metal stents, cardiologists, revascularization, drugeluting stents, new techonology, hospitals]
There is considerable variation across hospitals and regions in the diffusion of new medical technologies. Before 2003, bare-metal stents were used by cardiologists seeking to perform revascularization for blockages in the heart. In April of 2003, the FDA approved the use of coated antiproliferative but more expensive drugeluting stents, designed to reduce renarrowing of the artery at the location of the original stent. Adoption was rapid but uneven; in the year following their introduction, drugeluting stents comprised 83% of total stents among Medicare enrollees in the top quintile of hospitals, but just 33% in the low quintile hospitals. We used the Medicare claims data to test several models of diffusion, and found empirical support for models of expertise (better quality hospitals adopt quicker) and spillover models with correlated diffusion rates. There is suggestive evidence that hospitals that gained the greatest incremental benefit from drugeluting stents diffused more rapidly, but there is no support for either models of competition, knowledge spillovers, or profit maximization. That the most productive hospitals were those most likely to adopt new technology highlights the empirical pitfalls of estimating returns to new technologies based on instruments such as distance to hospitals. (pages 389 - 410)
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Who Uses the Roth 401(k), and How Do They Use It? - John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian
DOI: 10.7208/chicago/9780226146126.003.0013
[Roth 401(k), employee contribution, participation, 401(k), tax diversification motive, characteristics, usage, age]
Using administrative data from twelve companies that added a Roth 401(k) option between 2006 and 2010, we describe the characteristics of Roth contributions. Approximately one year after the Roth is introduced, 9% of 401(k) participants have positive Roth balances. Roth participation is more than twice as high among 401(k) participants who were hired after the Roth introduction than among 401(k) participants who were hired before the Roth introduction. In essence, once an employee joins a 401(k) she becomes passive/inattentive, thereby reducing the likelihood of reacting to the introduction of a new Roth option. Conditional on contributing to the Roth, 66% of employee contributions go to the Roth, and half of employees contribute to both the Roth and another 401(k) account, consistent with a tax diversification motive. Roth usage is decreasing in age, less likely among women, and only weakly correlated with salary and tenure once we control for other employee characteristics. (pages 411 - 444)
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