NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

The Persistence and Heterogeneity of Health among Older Americans

Florian Heiss, Steven F. Venti, David A. Wise

NBER Working Paper No. 20306
Issued in July 2014
NBER Program(s):The Program on Aging

We consider how age-health profiles differ by demographic characteristics such as education, race, and ethnicity. A key feature of the analysis is the joint estimation of health and mortality to correct for the effect of mortality selection on observed age-health profiles. The model also allows for heterogeneity in individual health at a point in time and the persistence of the unobserved component of health over time. The observed component of health is based on a multidimensional index based on 27 indicators of health. Most of the key results are shown by simulations that illustrate the range of issues that can be addressed using the model. Differences in health by education and racial-ethnic group at age 50 persist throughout the remainder of life. Based on observed profiles, the health of whites is about 8 percentile points greater than the health of blacks at age 50 but by age 90 the gap is only 5 percentile points. However, when corrected for mortality selection, the health of blacks is actually declining more rapidly with age than the health of whites; the true gap widens with age. We also find that much of the difference in age-health profiles by racial-ethnic group is accounted for by differences in the levels of education between race-ethnic groups--from two-thirds to 85 percent for men and about half for women. We also simulate differences in survival probabilities by level of education and health and use these probabilities to calculate the expected present discounted value (EPDV) of an immediate annuity with first payout at age 66 for persons by gender, level of education, and health decile. The range of EPDVs is over two-fold for both men and women suggesting enormous potential for adverse selection.

download in pdf format
   (906 K)

email paper

A non-technical summary of this paper is available in the 2015 number 1 issue of the NBER Bulletin on Aging and Health. 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/w20306

Users who downloaded this paper also downloaded* these:
Arora, Cohen, and Walsh w20264 The Acquisition and Commercialization of Invention in American Manufacturing: Incidence and Impact
Bradford, Courtemanche, Heutel, McAlvanah, and Ruhm w20320 Time Preferences and Consumer Behavior
Kilenthong and Townsend w20275 A Market Based Solution to Price Externalities: A Generalized Framework
Schorfheide, Song, and Yaron w20303 Identifying Long-Run Risks: A Bayesian Mixed-Frequency Approach
Knight w20311 An Econometric Evaluation of Competing Explanations for The Midterm Gap
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

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

Contact Us