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on Economics of Ageing |
| By: | Eleonora Patacchini; Gary V. Engelhardt |
| Abstract: | This paper examines the impact of work and retirement on the size, density, and composition of older Americans’ social networks. It uses novel panel data from the first two waves of the National Social Life, Health, and Aging Project. Critical components of the analysis include the development of an instrumental variable fixed-effect estimation strategy based on Social Security age-eligibility rules to isolate the causal effect of labor supply on networks. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2016-15&r=age |
| By: | van Santen, Peter (Research Department, Central Bank of Sweden) |
| Abstract: | This paper investigates the relationship between household saving and pensions, and estimates both the displacement effect of pensions on private saving and the precautionary saving effect due to uncertainty in pension income. I estimate the savings equation derived from a lifecycle model featuring income uncertainty using survey data for Dutch households, with subjective expectations on pension benefits and uncertainty. Exploiting exogenous variation due to pension fund performance, I find that households save significantly more due to uncertainty in pension income. Not controlling for uncertainty biases the estimated displacement effect of pensions on private savings towards zero. |
| Keywords: | Precautionary saving; Displacement effect; Subjective expectations |
| JEL: | D91 H55 J26 |
| Date: | 2016–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:rbnkwp:0330&r=age |
| By: | Koen Decancq; Alexander Michiels |
| Abstract: | This paper explores how to measure successful aging in a manner consistent with the preferences of older persons about what matters in their lives. First it considers the extent to which existing objective and subjective measures of successful aging reflect those preferences. It is found that both objective and subjective measures may contradict preferences that are held unanimously by older persons. Subsequently a new measure of successful aging is proposed that is consistent with those preferences. The implementation of the preference-based measure is illustrated with data for 11 European countries from the Survey of Health, Ageing and Retirement in Europe (SHARE). The proposed measure is found to yield different results than existing objective and subjective measures in terms of how successful aging has evolved between 2007 and 2013, how countries are ranked for successful aging, and the shape of the age distribution of successful aging. |
| Keywords: | preferences, SHARE, successful aging |
| Date: | 2016–10 |
| URL: | http://d.repec.org/n?u=RePEc:hdl:wpaper:1604&r=age |
| By: | Michael P. Keane (University of Oxford and University of South Wales); Susan Thorp (The University of Sydney) |
| Abstract: | We review evidence on decision making in complex choice situations – i.e., situations where there are many alternatives and/or where attributes of alternatives are difficult to understand. We focus on choices about health insurance, health care, and retirement planning, all of which are very important for the well-being of the elderly. Our review suggests that consumers in general, and the elderly in particular, have great difficulty making optimal choices in these areas. They often behave in ways that imply a high degree of “confusion,” such as (i) failure to understand key attributes of alternatives, or (ii) inadequate cognitive capacity to process payoff relevant information. We go on to discuss extensions to standard rational choice models that account for consumer confusion. These include allowing perceived attributes to depart from true attributes; the use of heuristics; and inattention or procrastination. Such departures from rationality can be moderated by cognitive ability, age etc. We hope that these new models may be useful in designing paternalistic interventions. |
| Keywords: | Aging; Life cycle; Health insurance; Health care; Pensions; Retirement plans; Discrete choice models |
| JEL: | I13 I11 J14 J32 H55 D14 D83 D84 D91 C35 |
| Date: | 2016–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:econwp:1610&r=age |
| By: | Geoffrey T. Sanzenbacher; Jorge D. Ramos-Mercado |
| Abstract: | The option to claim Social Security before the full retirement age (FRA) has been around for over 50 years. But claiming benefits early has an inherent trade-off: more years of income are received in exchange for an actuarially reduced monthly benefit. The actuarial reduction is designed to be “fair” for the average worker in that, regardless of the age at which a person claims, he can expect to receive the same expected present value (EPV) of his lifetime benefits. Aside from a period of high interest rates in the 1980s, this equality has roughly held for the average worker since the inception of the actuarial reduction. But the key word here is average. Workers who live less long than the average might maximize the EPV of benefits by claiming early, while those who live longer than average might benefit more from delay. This paper analyzes this issue by calculating the EPV of Social Security benefits by race, education, and gender, all three of which are correlates of both mortality and earnings. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2016-14&r=age |
| By: | Claudia Olivetti; Dana E. Rotz |
| Abstract: | We study associations among women’s current marital status, past marital history, and later-life labor force participation. Our results suggest when a woman unexpectedly divorces later in life, she might have to work longer to increase her assets prior to retirement. |
| Keywords: | divorce, marriage, retirement, women’s employment |
| JEL: | J I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:6e67e3ca61724bb3a9b99d52a5765a03&r=age |
| By: | Katrien Antonio; Sander Devriendt; Wouter de Boer; Robert de Vries; Anja De Waegenaere; Hok-Kwan Kan; Egbert Kromme; Wilbert Ouburg; Tim Schulteis; Erica Slagter; Michel Vellekoop; Marco van der Winden; Corné van Iersel |
| Abstract: | The quantification of longevity risk in a systematic way requires statistically sound forecasts of mortality rates and their corresponding uncertainty. Actuarial associations have a long history and continue to play an important role in the development, application and dispersion of mortality projections for the countries they represent. This paper gives an in depth presentation and discussion of the mortality projections as published by the Dutch (in 2014) and Belgian (in 2015) actuarial associations. The goal of these institutions was to publish a stochastic mortality projection model in line with both rigorous standards of state-of-the art academic work as well as the requirements of practical work such as robustness and transparency. Constructed by a team of authors from both academia and practice, the developed mortality projection standard is a Li & Lee type multi-population model. To project mortality, a global Western European trend and a country-specific deviation from this trend are jointly modelled with a bivariate time series model. We motivate and document all choices made in the model specification, calibration and forecasting process as well as the model selection strategy. We show the model fit and mortality projections and illustrate the use of the model in several pension-related applications. |
| Keywords: | stochastic mortality models, projected mortality, stochastic multi-population mortality, Li & Lee model, Lee & Carter model, Poisson regression, pension calculations, longevity risk, professional actuarial associations |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ete:afiper:554572&r=age |
| By: | Marek Dabrowski |
| Abstract: | The gross general government debt-to-GDP ratios in many advanced economies have reached the highest levels in peacetime history and continue to grow, putting into question sovereign solvency in these economies. In case of new adverse shocks, whether economic or political, global or country-specific, which result in the deterioration of growth prospects or higher real interest rates, or both, the situation could easily get out control. Apart from the risk of sovereign default, excessive public debt might also have a negative impact on the stability of financial sector and on economic growth in the medium and long term. Debt sustainability simulations for the group of highly-indebted advanced economies – those in which the general government gross public debt-to-GDP ratio exceeded 80 percent in 2015 – suggest that benefits of the current record-low interest rates and post-crisis growth recovery should be used for fiscal consolidation. The aim of this should be not only to stop further expansion of debt-to-GDP ratios, but also to gradually reduce them. Such corrective measures are needed in six out of seven G7 members (Germany being the exception) and in 10 out of 19 euro-area members. The fiscal situation of Japan, where gross debt has reached 250 percent of GDP, is particularly precarious. In addition, unless there are reforms of public pension, health and long-term care systems, fiscal consolidation in advanced economies must also create room for the higher spending levels in these areas that will result from aging populations. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:bre:polcon:17546&r=age |
| By: | Matthew S. Rutledge; John E. Lindner |
| Abstract: | Any worker who delays claiming Social Security receives a larger monthly benefit due to the actuarial adjustment. Some claimants – particularly women, who are more likely to take time out of the labor force early in their careers – can further increase their benefit if the extra years of work raise their career average earnings by displacing lower-earning years. This study uses the Health and Retirement Study (HRS) linked to earnings records to quantify the impact of women’s late-career earnings on Social Security benefits relative to men’s. It also compares the impact on women, depending on their marital status and education. |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2016-13&r=age |
| By: | Anek Belbase; Geoffrey T. Sanzenbacher |
| Abstract: | Social Security’s Representative Payee Program allows one individual to receive benefits on behalf of a retiree or disabled person who is incapable of managing them. In the case of retirees with cognitive impairment, the program could help prevent fraud by ensuring that Social Security benefits are immediately turned over to a capable individual. This paper seeks to answer three questions about the Representative Payee Program and its relationship to cognitive impairment. First, what share of individuals with cognitive impairment use a representative payee? Second, if individuals with cognitive impairment are not using a payee, what are they doing instead? Finally, is it possible to identify recipients with cognitive impairment who have no help managing their finances (through a representative payee or otherwise), a situation that makes them especially vulnerable to fraud? |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2016-12&r=age |