Health Dynamics, Life Expectancy Heterogeneity, and the Racial Gap in Social Security Wealth

Richard Foltyn and Jonna Olsson

No 19654, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Using biennial data from the Health and Retirement Study, we estimate age-dependent health dynamics and survival probabilities at annual frequency conditional on race, sex, self-reported health and other covariates. The estimates can be used to calculate heterogeneous life expectancies in the population. We show that the racial life expectancy gap remains large, even conditional on health, socioeconomic and marital status. Due to racial differences in health dynamics and mortality, married black men on average can expect to receive $6,400 (or 8%) less in Social Security benefits in present value terms. Using a rich life cycle model, we estimate that this corresponds to a welfare loss of about 4%, whereas black married women’s welfare loss is primarily driven not by their own shorter life expectancy but the shorter life expectancy of their husbands.

JEL-codes: C23 E21 I14 J14 (search for similar items in EconPapers)
Date: 2024-11
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Working Paper: Health dynamics, life expectancy heterogeneity, and the racial gap in Social Security wealth (2024)
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