Health Status and Health Dynamics in an Empirical Model of Expected Longevity

Hugo Benitez-Silva and Huan Ni ()
Additional contact information
Huan Ni: Kennesaw State University

No 05-14, Department of Economics Working Papers from Stony Brook University, Department of Economics

Abstract: Expected longevity is an important factor inuencing older individuals' decisions such as consumption, savings, purchase of life insurance and annuities, claiming of Social Security bene- fits, and labor supply. It has also been shown to be a good predictor of actual longevity, which in turn is highly correlated with health status. A relatively new literature on health investments under uncertainty, which builds upon the seminal work by Grossman (1972), has directly linked longevity with characteristics, behaviors, and decisions by utility maximizing agents. Our empirical model can be understood within that theoretical framework as estimating a production function of longevity. Using longitudinal data from the Health and Retirement Study, we directly incorporate health dynamics in explaining the variation in expected longevities, and compare two alternative measures of health dynamics: the self-reported health change, and the computed health change based on self-reports of health status. In 38% of the reports in our sample, computed health changes are inconsistent with the direct report on health changes over time. And another 15% of the sample can suffer from information losses if computed changes are used to assess changes in actual health. These potentially serious problems raise doubts regarding the use and interpretation of the computed health changes and even the lagged measures of self-reported health as controls for health dynamics in a variety of empirical settings. Our empirical results, controlling for both subjective and objective measures of health status and unobserved heterogeneity in reporting, suggest that self-reported health changes are a preferred measure of health dynamics.

Keywords: Expected Longevity; Health Status; Health Dynamics; Panel Data; Health and Retirement Study (search for similar items in EconPapers)
JEL-codes: I12 J14 (search for similar items in EconPapers)
Date: 2005-08
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://ms.cc.sunysb.edu/~hbenitezsilv/health2007.pdf First version, 2005 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to ms.cc.sunysb.edu:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
Journal Article: Health status and health dynamics in an empirical model of expected longevity (2008)
Working Paper: Health Status and Health Dynamics in an Empirical Model of Expected Longevity (2007)
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:nys:sunysb:05-14

Access Statistics for this paper

More papers in Department of Economics Working Papers from Stony Brook University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().