An empirical analysis of the importance of controlling for unobserved heterogeneity when estimating the income-mortality gradient

Adriaan Kalwij

Demographic Research, 2014, vol. 31, issue 30, 913-940

Abstract: Background: Statistical theory predicts that failing to control for unobserved heterogeneity in a Gompertz mortality risk model attenuates the estimated income-mortality gradient toward zero. Objective: I assess the empirical importance of controlling for unobserved heterogeneity in a Gompertz mortality risk model when estimating the income-mortality gradient. The analysis is carried out using individual-level administrative data from the Netherlands over the period 1996-2012. Methods: I estimate a Gompertz mortality risk model in which unobserved heterogeneity has a gamma distribution and left-truncation of life durations is explicitly taken into account. Results: I find that, despite a strong and significant presence of unobserved heterogeneity in both the male and female samples, failure to control for unobserved heterogeneity yields only a small and insignificant attenuation bias in the negative income-mortality gradient. Conclusions: The main finding, a small and insignificant attenuation bias in the negative income-mortality gradient when failing to control for unobserved heterogeneity, is positive news for the many empirical studies, whose estimations of the income-mortality gradient ignore unobserved heterogeneity.

Keywords: proportional hazards; unobserved heterogeneity; mortality; income (search for similar items in EconPapers)
JEL-codes: J1 Z0 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.demographic-research.org/volumes/vol31/30/31-30.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dem:demres:v:31:y:2014:i:30

DOI: 10.4054/DemRes.2014.31.30

Access Statistics for this article

More articles in Demographic Research from Max Planck Institute for Demographic Research, Rostock, Germany
Bibliographic data for series maintained by Editorial Office ().