The Effect of Subjective Survival Probabilities on Retirement and Wealth in the United States

David E. Bloom, David Canning, Michael Moore, Younghwan Song

NBER Working Paper No. 12688
Issued in November 2006
NBER Program(s):Aging, Health Care, Health Economics, Labor Studies, Public Economics

We explore the proposition that expected longevity affects retirement decisions and accumulated wealth using micro data drawn from the Health and Retirement Study for the United States. We use data on a person's subjective probability of survival to age 75 as a proxy for their prospective lifespan. In order to control for the presence of measurement error and focal points in responses, as well as reverse causality, we instrument subjective survival probabilities using information on current age, or age at death, of the respondent's parents. Our estimates indicate that increased subjective probabilities of survival result in increased household wealth among couples, with no effect on the length of the working life. These findings are consistent with the view that retirement decisions are driven by institutional constraints and incentives and that a longer expected lifespan leads to increased wealth accumulation.

download in pdf format
   (209 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w12688

Published: Clark, Robert, Naohiro Ogawa, and Andrew Mason (eds.) "Population Aging, Intergenerational Transfers and the Macroeconomy." Cheltenham, U.K. and Northampton, MA: Elgar, 2007.

Users who downloaded this paper also downloaded* these:
Gan, Hurd, and McFadden Individual Subjective Survival Curves
Hurd, McFadden, and Gan Subjective Survival Curves and Life Cycle Behavior
Hurd, Smith, and Zissimopoulos w9140 The Effects of Subjective Survival on Retirement and Social Security Claiming
Gan, Gong, Hurd, and McFadden w10789 Subjective Mortality Risk and Bequests
Bloom, Canning, Mansfield, and Moore w12621 Demographic Change, Social Security Systems, and Savings
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us