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Spousal Health Effects: the Role of Selection
Author(s):
James Banks, University of Manchester
Elaine J. Kelly, Institute for Fiscal Studies
James P. Smith, RAND Corporation
Abstract:

               

   

   

   

   

   

   

   

   

   

May 2013  Preliminary Draft 

Spousal Health Effects: the Role of Selection

James Banks* Elaine Kelly** James P Smith***

* University of Manchester and Institute of Fiscal Studies **Institute of Fiscal Studies ***Rand Corporation

This paper was supported by grants from the National Institute of Aging and to the Economic and Social Research Council for co-funding through the Centre for Microeconomic Analysis of Public Policy at the IFS. It will be presented in the Boulders NBER economics of aging conference in May 2013. The expert programming assistance of Iva MacLennan is gratefully acknowledged.
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Partner selection is a potentially important and under-researched aspect of levels and inequality of health in all countries. If the healthy marry the healthy and the unhealthy the unhealthy and health of partners matters as seems likely, then partner selection will exacerbate health inequalities in a population. Health histories of partners may matter for several reasons. First, individuals may select their partners in part based on observable and unobservable (to them) aspects of their potential partners prior health. Second, personal attributes such as education and health behaviors (smoking, drinking, and exercise) to mention just a few may matter in partner selection and therefore produce correlated health outcomes of partners over time even if there was no health correlation between partners at the beginning of relationships. Partner selection may matter as well for international differences in health outcomes. In some countries, partner selection is at the discretion of parents and may be heavily influenced by customs and only take place within narrowly defined and highly stratified groups. Even in industrialized countries with similar levels of average incomes, heterogeneity and geographic mobility may vary a good deal producing quite different degrees of partner selection. The case we analyze in this paper- England and the United States- is a good example since the United States is a more heterogeneous country (if only due to their immigration history and size) and there is much more geographical mobility in the U.S. than in England (Banks et al, 2012). There are two aspects of the existing scientific infrastructure that has limited research on this question. Until recently, our major surveys have been focused on individuals, or when there was information on couples there would be only a single household reporter for both individuals in the partner/spousal unit. That is a major limitation especially when we need to know prepartnership data about both people (Smith, 2009). The partner/spouse data in our analysis were reported by each partner about themselves. Secondly, comparable cross-national data did not
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Evidence for Significant Compression of Morbidity in the Elderly U.S. Population
Author(s):
David M. Cutler, Harvard University and NBER
Mary Beth Landrum, Harvard University
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This paper was distributed as Working Paper 19268, where an updated version may be available.

Early Retirement, Mental Health and Social Networks
Author(s):
Axel H. Börsch-Supan, Max Planck Institute for Social Law and Social Policy and NBER
Abstract:

Boersch-Supan explores the inter-relationships between early retirement, mental health -- including cognition and subjective well-being -- 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. He argues that early retirement has side effects on the retirees' social networks. Social contacts are a side effect of employment that keeps workers mentally agile. Social contacts, especially with friends, decline gradually after retirement, with an acceleration effect when retirement was early. These side effects appear to explain part of the accelerated cognitive aging that occurs after early retirement.

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Expectations, Aging and Cognitive Decline
Author(s):
Gábor Kézdi, University of Michigan
Robert J. Willis, University of Michigan and NBER
Abstract:

Expectations play an important role in decisions under uncertainty. Yet we have limited empirical knowledge about how expectations are formed, how they change, and how they affect behavior, especially in the population in general. In particular, we know little about whether and how aging affects expectations, or what the consequences may be for important decisions. Kezdi and Willis use longitudinal data from the HRS to document general patterns in expectations in various domains with respect to aging, and they investigate the potential role of cognitive decline in those patterns. They focus on two aspects of expectations: optimism and uncertainty. With the notable exception of survival expectations, they find that optimism decreases and uncertainty increases with age in five different domains, controlling for time, cohort, and selection effects. Cognitive decline plays a modest but statistically significant role in explaining the decline of optimism and a less significant role in explaining the increase of uncertainty. In contrast, optimism about survival chances increases significantly with age and uncertainty decreases. They speculate that increased optimism about survival is consistent with Carstensen's socio-emotional selectivity theory of aging. Such expectations may also serve as a heuristic in choosing sufficient precautionary resources in the face of an uncertain lifetime.

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The Nexus of Social Security Benefits, Health, and Wealth at Death
Author(s):
James M. Poterba, Massachusetts Institute of Technology and NBER
Steven F. Venti, Dartmouth College and NBER
David A. Wise, Harvard University and NBER
Abstract:

Social Security benefits are the most important component of the income of a large fraction of older Americans. A significant fraction of elderly Americans approach the end of life with few financial assets and no home equity, relying almost entirely on Social Security benefits for support. Whether an individual reaches late-life with positive non-annuity wealth depends importantly on health, which is quite persistent over the lifetime. Persons in poor health in old age have a higher-than-average probability of having experienced low earnings while in the labor force, which puts them at greater risk of having low Social Security benefits in retirement. While the progressivity of the Social Security benefit formula provides a safety net to support low-wage workers in retirement, a noticeable share of the elderly, especially those in single-person households, still have income below the poverty level in their last years of life. Many of these individuals have few assets to draw on to supplement their income, and are in poor health. In general, low assets and low income in old age are strongly related to poor health. Poterba, Venti, and Wise explore this nexus and describe the relationship between Social Security benefits and the exhaustion of non-annuity assets near the end of life. They examine the relationship between the draw down 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, Social Security benefits, and other annuity benefits. They conclude that Social Security and defined benefit pension benefits are strongly "protective" of non-annuity assets, with a negative relationship between these income flows and the likelihood of exhausting non-annuity assets. They also find that poor health is an important correlate of the draw down of non-annuity wealth.

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This paper was distributed as Working Paper 18658, where an updated version may be available.

Who Uses the Roth 401(k), and How Do They Use It?
Author(s):
David Laibson, Harvard University and NBER
John Beshears, Harvard University and NBER
James J. Choi, Yale University and NBER
Brigitte C. Madrian, Brigham Young University and NBER
Abstract:

Using administrative data from twelve companies that added a Roth 401(k) option between 2006 and 2010, Laibson, Beshears, Choi, and Madrian describe the characteristics of Roth contributions. Approximately one year after the Roth is introduced, 9 percent 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 percent of employee contributions go to the Roth. 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 and less likely among female employees. There is only a weak correlation with salary and tenure once the authors control for other employee characteristics.

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Grandpa and the Snapper: the Wellbeing of the Elderly who Live with Children
Author(s):
Angus Deaton, Princeton University and NBER
Arthur A. Stone, University of Southern California
Abstract:

Deaton and Stone note that elderly Americans who live with people under age 18 have lower life evaluations than those who do not. These elderly 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. Yet 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, and 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.

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A Comparison of Different Measures of Health and their Relation to Labor Force Transitions at Older Ages
Author(s):
Arie Kapteyn, University of Southern California and NBER
Erik Meijer, University of Southern California
Abstract:

Kapteyn and Meijer discuss three indexes of health that have been proposed in the literature and compare their theoretical and empirical properties, using data from the Survey of Health, Aging and Retirement in Europe. They 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 proposed by Poterba, Venti, and Wise (2011, 2013) provides a better fit than the competing indexes. It appears that this is mainly because of 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.

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The Lifetime Risk of Nursing Home Use
Author(s):
Michael D. Hurd, RAND Corporation and NBER
Pierre-Carl Michaud, HEC Montréal and NBER
Susann Rohwedder, RAND Corporation
Abstract:

Hurd, Michaud, and Rohwedder  estimate the lifetime distribution of stays in nursing homes using ten waves of HRS data covering the population age 50 and above. Using both non‐parametric and parametric approaches that account for censoring, they estimate that a 50-year-old has a 60 percent chance of ever entering a nursing home before he dies and that, conditional on any stay, the average duration is just over a year. They show that stays at the end of life, 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 percent. Being female, white, and a non‐smoker are associated with higher lifetime risk because of lower (competing) mortality risk and higher nursing home risk at older ages.

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The Diffusion of New Medical Technology: The Case of Drug-Eluting Stents
Author(s):
Jonathan S. Skinner, Dartmouth College and NBER
Amitabh Chandra, Harvard University and NBER
David Malenka, Dartmouth College
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Understanding the SES Gradient in Health among the Elderly: The Role of Childhood Circumstances
Author(s):
Till Stowasser, University of Wuerzburg
Florian Heiss, University of Duesseldorf
Daniel L. McFadden, University of California, Berkeley and NBER
Joachim Winter, University of Munich
Abstract:

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. Stowasser, Heiss, McFadden, and Winter 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. They introduce some methodological refinements and integrate retrospective survey data on early childhood circumstances into this framework. They confirm that childhood health has lasting predictive power for adult health. They 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.

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Nutrition, Iron Deficiency Anemia, and the Demand for Iron Fortified Salt: Evidence from an Experiment in Rural Bihar
Author(s):
Abhijit Banerjee, Massachusetts Institute of Technology and NBER
Sharon Barnhardt, Indian Institute of Management - Ahmedabad
Esther Duflo, Massachusetts Institute of Technology and NBER
Abstract:

Iron Deficiency Anemia is frequent among the poor worldwide. While it can be prevented with the appropriate supplement 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. Banerjee, Barnhardt, and Duflo investigate 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 percent 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 67 per capita and per day), and that average BMI is not very low, indicating that the overall intake of calories must be adequate. This suggest that micro-nutrient deficiency is likely playing a key role. Almost all households purchase salt, which makes DFS a promising channel for distributing supplemental iron. A randomized pricing experiment suggests that subsidizing DFS by about 55 percent led to a fairly large take up, even without detailed information campaign.

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