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The Limited Power of Socioeconomic Status to Predict Longevity: Implications for Pension Policy

Arno Baurin ()

No 2020019, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Differences of life expectancy across socioeconomic status are well-documented and many economists argue that they should be taken into account when designing pension systems. This paper analyses the relevance of using socioeconomic characteristics to differentiate retirement age. Using US mortality rate assembled by Chetty et al. (2016), we simulate the longevity distribution both across and within socioeconomic status. Then, we analyze the power of socioeconomic status to predict individuals' longevity. Results suggest that socioeconomic status has relatively limited predictive power, due to the huge within status longevity variance.

Keywords: Pension policy; Pension progressivity; Longevity; Tagging (search for similar items in EconPapers)
JEL-codes: D63 H55 J14 J18 (search for similar items in EconPapers)
Date: 2020-06-10
New Economics Papers: this item is included in nep-age, nep-lab and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2020019

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