nep-age New Economics Papers
on Economics of Ageing
Issue of 2018‒06‒11
eight papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. A nudge to quit? The effect of a change in pension information on annuitization, labor supply and retirement choices among older workers By Hagen, Johannes; Hallberg, Daniel; Sjögren Lindquist, Gabriella
  2. Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach By Ayuso, Mercedes; Bravo, Jorge Miguel; Holzmann, Robert
  3. Who pays for the consumption of young and old? By Hippolyte D'Albis; Carole Bonnet; Xavier Chojnicki; Najat El Mekkaouide Freitas; Angela Greulich; Jérôme Hubert; Julien Navaux
  4. Time preferences of older people with mild cognitive impairment By Y. Bayer, B.J. Ruffle, R. Zultan, T. Dwolatzky
  5. Sustainability of the pension system in Macedonia: A comprehensive analysis and reform proposal with MK-PENS - dynamic microsimulation model By Blagica Petreski; Pavle Gacov
  6. The kids are alright - labour market effects of unexpected parental hospitalisations in the Netherlands By Sara Rellstab; Pieter Bakx; Pilar (P.) Garcia-Gomez; Eddy (E.K.A.) van Doorslaer
  7. Working Paper 01-18 - Perspectives démographiques 2016-2060 : analyses de sensibilité, scénarios alternatifs et effets budgétaires et sociaux By Johan Duyck; Jean-Marc Paul; Marie Vandresse
  8. Cognition and SES Relationships Among the Mid-Aged and Elderly: A Comparison of China and Indonesia By John Strauss; Firman Witoelar; Qinqin Meng; Xinxin Chen; Yaohui Zhao; Bondan Sikoki; Yafeng Wang

  1. By: Hagen, Johannes; Hallberg, Daniel; Sjögren Lindquist, Gabriella
    Abstract: Nudge is about affecting behavior in a certain way through small changes to the choice architecture. However, a nudge may also affect behaviors that the architect did not intend. We show that such spillover effects exist in a highly policy relevant context where the use of nudge is widespread; retirement. Specifically, we find that an exogenous application form change in the Swedish pension system that highlighted a five-year payout on the expense of a life annuity not only increased the demand for the nudged payout (as expected), but also induced individuals to retire earlier. We attribute the effects to decision-framing.
    Keywords: annuity,pension,nudge,decision framing
    JEL: D91 J26 J32
    Date: 2018
  2. By: Ayuso, Mercedes (University of Barcelona); Bravo, Jorge Miguel (Universidade Nova de Lisboa); Holzmann, Robert (University of New South Wales)
    Abstract: In many policy areas it is essential to use the best estimates of life expectancy, but such estimates are vital to most areas of pension policy – from indexed access age and the calculation of initial benefits to the financial sustainability of pension schemes and the operation of their balancing mechanism. This paper presents the conceptual differences between static period and dynamic cohort mortality tables, estimates the differences in life expectancy between both tables using data from Portugal and Spain, and compares official estimates of both life expectancy estimates for Australia, the United Kingdom, and the United States for 1981, 2010 and 2060. This comparison reveals major differences between period and cohort life expectancy in and between countries and across years. Using measures of period instead of cohort life expectancy creates an implicit subsidy for individuals of 30 percent or more, with potentially stark consequences on the financial sustainability of pension schemes. These and other implications for pension policy are explored and next steps suggested.
    Keywords: cross-country comparison, Lee-Carter, life expectancy indexation, balancing mechanism
    JEL: D9 G22 H55 J13 J14 J16
    Date: 2018–04
  3. By: Hippolyte D'Albis (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Carole Bonnet (INED - Institut national d'études démographiques); Xavier Chojnicki (LEM - Lille - Economie et Management - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Najat El Mekkaouide Freitas (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine); Angela Greulich (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, INED - Institut national d'études démographiques); Jérôme Hubert (LEM - Lille - Economie et Management - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Julien Navaux (University of Ottawa [Ottawa])
    Abstract: This article provides a comprehensive overview of how the funding of consumption at different ages is shared between the State, the individual and the family. By applying the National Transfer Accounts method for France, we developed a unique database to analyze how the funding of consumption is secured at each age, how its structure has changed over time, and how the consumption is financed in France compared to that of a set of other developed countries. We find that the elderly in France finance themselves increasingly by their own means, even though public funding of this age group remains significant in France in comparison to other countries. Conversely, the young rely more and more on the State to finance their consumption. Within our sample, France is the country where the young benefited most from public transfers.
    Keywords: Generational Economy,National Transfer Accounts,Inter- Generational Equity,Private and Public Consumption
    Date: 2018–05
  4. By: Y. Bayer, B.J. Ruffle, R. Zultan, T. Dwolatzky (Wilfrid Laurier University)
    Abstract: Cognitive impairment has a detrimental influence on the decision-making capabilities of older people. This study investigates the ways in which the time preferences of older adults with mild cognitive impairment (MCI) are influenced by their executive cognitive abilities. Within the framework of this study, older adults underwent a cognitive evaluation using a computerized cognitive assessment battery and then responded to a questionnaire eliciting their preferences for changing amounts of money and time periods. We found that those individuals with better executive cognitive abilities displayed a lower rate of subjective discounting. This study advances our understanding of economic decision-making in old age, especially as influenced by cognitive decline. We hope that our findings will serve as a catalyst in the construction of financial tools relevant to the growing population of older people in society, and thus help to alleviate negative phenomena resulting in older individuals being subjected to fraud and discrimination.
    Keywords: mild cognitive impairment, experimental economics, time preferences, financial decision-making, executive functions, old age
    Date: 2018–05–30
  5. By: Blagica Petreski; Pavle Gacov
    Date: 2018–03
  6. By: Sara Rellstab (Erasmus University Rotterdam); Pieter Bakx (Erasmus University Rotterdam); Pilar (P.) Garcia-Gomez (Erasmus University Rotterdam); Eddy (E.K.A.) van Doorslaer (Erasmus University Rotterdam)
    Abstract: Unexpected negative health shocks may have serious consequences for labour force participation, not only for those who incur the shock but also for their family members. In particular, adult children may spend substantial time providing informal care and may incur stress-induced mental health problems following a parental health shock, which may in turn lead to reductions in labour supply. We link administrative data on labour market outcomes, hospitalisations and family relations for the full Dutch population for the years 1999-2008 to evaluate the effect of an unexpected parental hospitalisation on the probability of employment and on conditional earnings for the working age population. Using a difference-in-differences model combined with coarsened exact matching and individual fixed effects, we find no effect of an unexpected parental hospitalisation on either the probability of employment or conditional earnings for Dutch men and women, and neither for the full population nor for subpopulations most likely to become a caregiver. These findings suggest that the extensive public coverage of formal long-term care in the Netherlands provides sufficient opportunities to deal with adverse health events of family members without having to compromise one’s labour supply.
    Keywords: Labour supply; parental health shocks; informal care
    JEL: J22 J14 J10 I10
    Date: 2018–05–18
  7. By: Johan Duyck; Jean-Marc Paul; Marie Vandresse
    Abstract: This Working Paper analyses various alternative population projections. The first approach shows the impact of alternative future development scenarios for the population growth components. The effects of some of these scenarios on the development in social expenditure and the at-risk-of-poverty rate for pensioners are also analysed. The second approach consists in carrying out a sensitivity analysis of the population projection to some model parameters, in particular the observation periods selected to estimate trends.
    JEL: J11
    Date: 2018–02–05
  8. By: John Strauss; Firman Witoelar; Qinqin Meng; Xinxin Chen; Yaohui Zhao; Bondan Sikoki; Yafeng Wang
    Abstract: In this paper, we use a measure of fluid intelligence, an adaptive number series test, to measure that part of cognition for respondents in two developing countries: China and Indonesia, both with very low educated elderly populations. This test was specially adapted by us and our collaborators from measures used in the United States to better fit such populations. We also use a measure of episodic memory and one measuring mental state intactness and examine their distributions and then the socio-economic gradients associated with each, concentrating on gender differences and how those change as SES and variables measuring community development are added. We find large variation in our cognition measures in both countries, even among those 60 and over with no schooling. We explore the bivariate socio-economic gradients for these measures, separately for different age groups: 45-59 and 60 and above. We find strong gender, education and rural-urban gradients. Of these, the education gradient is the strongest, followed by the rural-urban gradient. China has a stronger rural-urban gradient than Indonesia, which is associated with the hukou residential permit system in China. We find a significant, negative multivariate differential for women, that is significantly larger in China than Indonesia. The gender differential in both countries is smaller for the mid-aged, 45-59, for whom the gender schooling differentials are smaller. The gender differential declines substantially, and the China-Indonesia differential disappears once we control for SES characteristics. Adding community measures related to mean schooling and asset levels does not affect the gender differential. Schooling levels are monotonically and significantly related to higher levels of cognition for all three of the variables we use. The magnitudes of the schooling coefficients are relatively large. Higher log of household per capita expenditure (pce) is positively associated with cognition, more so in China. Other SES characteristics such as height, are also positively related to the cognition measures, again more strongly so in China. Rural respondents have substantially lower levels of cognition measures, with a significantly stronger gradient in China. Mean community level schooling and log pce are also positively related to cognition outcomes, especially for elderly women.
    JEL: I15 O53
    Date: 2018–05

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