Health And Retirement Survey Research Articles

Poster 4: Ethnic differences in arthritis, depression, and activities of daily living

Objective: To investigate ethnic differences in depression and functional limitations in the general population and among persons with arthritis. Design: Cross-sectional survey using the 1996 National Health and Retirement Survey (HRS). Setting: Households in the contiguous United States. Participants: 7899 persons (age range, 54–65y) selected by multistage area probability sample. Interventions: Not applicable. Main Outcome Measures: The main predictive measure was ethnicity, reported as non-Hispanic white, black, or Hispanic. Outcome variables included self-reported arthritis, depression, and functional limitations. Arthritis was determined by symptom (s) complaints or physician diagnosis. Depression was diagnosed using the World Health Organization’s Composite International Diagnostic Interview. Functional limitations was defined by 1 or more activity of daily living (ADL) limitations. Results: Arthritis was reported by 49% of whites, 54% of blacks, and 46% of Hispanics. Depression rates were 8.1% overall, with 7.8% whites, 8.8% blacks, and 10.7% Hispanics reporting depression. Among persons with arthritis, functional limitations were reported by 18% whites, 34% blacks, and 37% Hispanics. For all persons with arthritis, depressed persons report ADL limitations more frequently than nondepressed persons (Hispanics: 63% vs 33%, blacks: 54% vs 30%, whites: 39% vs 16%). Minorities with arthritis are more likely to be depressed than whites with arthritis (Hispanics: 14%, OR=1.40, 95% CI, .99–1.96; blacks: 13%, OR=1.24, 95% CI, 0.96–1.96 [white referent]). Conclusions: The HRS data demonstrated higher rates of arthritis and depression among minority groups as compared with their white counterparts. Furthermore, in subjects with arthritis, depression was associated with higher rates of ADL limitations and minorities were more functionally limited than whites. Factors that might have contributed to this latter association include socioeconomic status, chronic comorbid medical conditions, education, and medical accessibility.

Self-Rated Life Expectancy as a Predictor of Mortality: Evidence from the HRS and AHEAD Surveys

Background: An extensive literature has demonstrated that self-ratings of health predict mortality, even after controlling for more objective measures of health, health habits and sociodemographic characteristics. We examine the role of a related concept, self-rated life expectancy, in predicting mortality. Objective: To assess whether self-rated life expectancy predicts mortality after controlling for measures of health, self-rated health, and sociodemographic characteristics. Methods: Using data from the 1992 Health and Retirement Survey (HRS), the 1993 Asset and Health Dynamics Among the Oldest Old (AHEAD) survey, and the second Tracker file (2.0), Cox proportional hazard models were estimated to assess whether self-rated life expectancy predicts mortality, after adjusting for self-rated health and several potential confounders that might otherwise explain this relationship. The AHEAD sample included 2,102 men and 3,160 women. During the 2 years of follow-up, 9% (n = 185) of the men died and 5% (n = 166) of the women died. The HRS sample was comprised of 4,090 men and 4,885 women. Four percent (n = 164) of the men died and 2% (n = 99) of the women died in the 3 years of follow-up. Results: In the older, AHEAD sample, both self-rated life expectancy (p < 0.01) and self-rated health (p < 0.05) predicted mortality for both men and women, even when the two measures were included in the model together. In the younger, HRS sample, self-rated life expectancy was not significantly associated with mortality when self-rated health was included in the model. Conclusion: Our findings suggest that, although self-rated life expectancy and self-rated health may be conceptually related, they have independent empirical effects on mortality.

Wealth Effects and the Consumption of Leisure: Retirement Decisions During the Stock Market Boom of the 1990s

It is well accepted that households increase consumption of goods and services in response to an unexpected increase in wealth. Consensus estimates of this wealth effect are in the range of 3 to 5 cents of additional consumption spending in the long run for each additional dollar of wealth. Economic theory also suggests that consumption of leisure, like consumption of goods and services, should increase with positive shocks to wealth. In this paper, we ask whether the run-up in equity prices during the 1990s led older workers to retire earlier than they had previously planned. We identify the effect by exploiting unique data on retirement expectations from the Health and Retirement Survey (HRS). Our econometric results suggest that respondents who held corporate equity immediately prior to the bull market of the 1990s retired, on average, 7 months earlier than other respondents.

Upstream Intergenerational Transfers

This study analyzes upstream intergenerational transfers from middle-ages children to their elderly parents. We formulate a model in which the middle-aged child transfers both money and time to an elderly parent, based on an altruistic motive. We test the altruistic assumption empirically and examine substitution between financial transfers and time transfers using data from the Health and Retirement Survey (HRS). Empirical results support the assumption that upstream transfers are motivated by altruism, particularly financial transfers. Poor parents receive more money. Overall, the results of time transfers provide less strong support for our model. A child with a high way tends to transfer money rather than time. Our findings on time transfers differ from predictions of models based on exchange motives. Public subsidies of nursing home care crowd out both private financial and time transfers.

On the Distribution and Dynamics of Health Costs

Using data from the Health and Retirement Survey (HRS) and Assets and Health Dynamics of the Oldest Old (AHEAD), this paper presents estimates of the stochastic process that determines both the distribution and dynamics of health costs. We nd that the data generating process for health costs is well represented by an ARMA(1,1). Furthermore, innovations to this process are close to lognormally distributed. In any given year, .1% of our sample receives a health cost shock that costs at least $80,000 in present value. Lastly, we discuss the accuracy of numerical solutions when integrating over health costs. Assuming lognormality, simple approximation rules work well.

Longevity Expectations and Death: Can People Predict Their Own Demise?

Using four waves of the Health and Retirement Survey (HRS) this paper tests whether longevity expectations predict actual mortality at the individual level. The results suggest longevity expectations do predict mortality reasonably well. Serious health shocks and new activity limitations do reduce longevity expectations. Given one is prepared to accept that other unobserved causal factors have the same means for those who die and those who survive in each wave it is possible to test whether longevity expectations can serve as a sufficient statistic. The test findings imply that they do not appear to reflect all that individuals know about their personal odds of living to seventy-five.(This abstract was borrowed from another version of this item.)

Social Security and Retirement

A critical question for Social Security policy is how program incentives affect retirement behavior. We use the wealth of new data available through the Health and Retirement Survey (HRS) to examine the impact of Social Security incentives on male retirement. We implement forward-looking models of retirement whereby individuals consider not just the incentives to work in the next year but in all future years as well. We find that such forward looking incentive measures for Social Security are significant determinants of retirement decisions. Our findings suggest that Social Security policies which increase the incentives to work at older ages can significantly reduce the exit rate of older workers from the labor force.

Longevity Expectations and Death: Can People Predict Their Own Demise?

Using four waves of the Health and Retirement Survey (HRS) this paper tests whether longevity expectations predict actual mortality at the individual level. The results suggest longevity expectations do predict mortality reasonably well. Serious health shocks and new activity limitations do reduce longevity expectations. Given one is prepared to accept that other unobserved causal factors have the same means for those who die and those who survive in each wave it is possible to test whether longevity expectations can serve as a sufficient statistic. The test findings imply that they do not appear to reflect all that individuals know about their personal odds of living to seventy-five.

How Much Should Americans Be Saving for Retirement?

How much should Americans save prior to retirement? Given Social Security's shaky financial condition, this is a critical question for baby boomers. A financial planning program-ESPlanner-is applied to data from the Health and Retirement Survey (HRS) to consider the amount that households approaching retirement should save.

An empirical analysis of the social security disability application, appeal, and award process

We provide an empirical analysis of the Social Security disability application, award, and appeal process using the Health and Retirement Survey (HRS). We show that the appeal option increases the award probability from 46% to 73%. However, this comes at the cost of significant delays: the duration between application and award is over three times longer for those who are awarded benefits after one or more stages of appeal. Our results reveal the importance of self-selection in application and appeal decisions. In particular, an individual's self-assessed disability status emerges as one of the most powerful predictors of application, appeal, and award decisions.

Pension Type and Retirement Wealth

In this article I analyze the effect of a shift from defined‐benefit pensions to defined‐contribution pensions on retirement wealth. Regressions results suggest that workers with a defined‐benefit pension appear to have more retirement resources than those who either have no pension or have a defined‐contribution pension, although individual savings is generally insufficient. I use the Health and Retirement Survey (HRS), which contains data on individuals 51 to 61 years of age.

Optimal Asset Allocation towards the End of the Life Cycle: To Annuitize or Not to Annuitize?

INTRODUCTION ...It is a well known fact that annuity contracts, other than in the form of group insurance through pension systems, are extremely rare. Why this should be so is a subject of considerable current interest. It is still ill-understood. Adverse selection, causing an unfavorable payout, and the fact that some utility may be derived from bequest are, presumably, an important part of the answer.... Franco Modigliani, December 9, 1985 Nobel Prize acceptance speech in Stockholm, Sweden.(1) Most individuals must decide how much, if any, of their wealth should be annuitized near the time they retire. For many individuals a large portion of wealth is forcefully annuitized; for example, pensions and government social security. In other cases they have discretion in the matter. In its most general form, purchasing a life annuity involves paying a non-refundable lump sum to an insurance company in exchange for a guaranteed constant life-long consumption stream that cannot be outlived. The natural alternative to annuitization is investment amongst the various asset classes, such as equity, fixed income and real estate, together with a fixed periodic withdrawal equivalent to the consumption stream generated by the annuity. This do-it-yourself strategy incurs the financial risk of under-funding retirement in the event of long-run inferior investment returns in conjunction with unexpected human longevity. As Modigliani (1986), Friedman and Warshawsky (1990), Miter (1994), Poterba and Wise (1996) and many others have pointed out, very few people consciously choose to annuitize their marketable (liquid or discretionary) wealth, as evidenced by the comprehensive Health and Retirement Survey (HRS), conducted in the United States.(2) Only 1.57 percent of the HRS respondents reported annuity income. Likewise, only 8.0 percent of HRS respondents with a defined contribution pension plan selected an annuity payout. This phenomenon is especially puzzling within the paradigm of the Ando and Modigliani (1963) Life Cycle Hypothesis (LCH), under which individuals seek to their lifetime consumption by annuitizing wealth. What better way is there to smooth and consumption for the rest of one's natural life? The most common answer is to simply abandon the strict form of the life-cycle hypothesis and declare that individuals have strong bequest motives, as Bernheim (1991), Hurt (1989) and many others have suggested. Another approach, which we prefer, is to argue that even when individuals have negligible bequest motives, annuities are simply too expensive, as was hypothesized by Warshawsky (1988) and Friedman and Warshawsky (1990). This means that the implied rates of return from life annuities are much lower as a result of transaction costs, or loads, than those available from other investment assets, considering the life-long consumption guarantee which they provide. The contribution of this paper is to give prescriptive advice in the face of these costs. We suggest that most individuals should defer annuitization, via the do-it-yourself scheme, until is no longer possible to beat the mortality adjusted rate of return from the life annuity. We call this approach the do-it-yourself-and-then-switch strategy. Our methodology deviates from the traditional financial economic utility maximizing approach to asset allocation by focusing on the probability of consumption shortfall, as the measure of risk. The classic utility-based approach would involve solving the following dynamic stochastic optimization problem: [Mathematical Expression Omitted], (1) where U([C.sub.t]) denotes the instantaneous utility of consumption; [Rho] is the personal discount rate for consumption; B([W.sub.T]) denotes the utility of bequest; [Gamma] is the discount rate for bequest; T is the stochastic time of death; [a.sub.t] is the amount of annuities; [C.sub.t] is the rate of consumption; [W. …

Upstream Intergenerational Transfers

This study analyzes upstream intergenerational transfers from middle-aged children to their elderly parents. We formulate a model in which the middle-aged child transfers both money and time to an elderly parent, based on an altruistic motive. We test the altruistic assumption empirically and examine substitution between financial transfers and time transfers using data from the Health and Retirement Survey (HRS). Empirical results support the assumption that upstream transfers are motivated by altruism, particularly financial transfers. Poor parents receive more money. Overall, the results of time transfers provide less strong support for our model. A child with a high wage tends to transfer money rather than time. Our findings on time transfers differ from predictions of models based on exchange motives. Public subsidies of nursing home care crowd out both private financial and time transfers.

Expectations of nursing home use in the Health and Retirement Study: the role of gender, health, and family characteristics.

Economic models of life cycle behavior suggest that expectations about future events may affect savings, insurance, and retirement planning. This article uses data from the first wave of the Health and Retirement Survey (HRS) to examine how personal characteristics and health conditions influence expectations of nursing home use. Subjective expectations of nursing home use are quite close to known probabilities of lifetime use. There are marked differences in the determinants of expectations for women and men that also conform to actual behavior. There is strong evidence that women and men incorporate what is known about nursing home risk into their own expectations, even many years prior to the time when they are most likely to need long-term care.

Complex marital histories and economic well-being: the continuing legacy of divorce and widowhood as the HRS cohort approaches retirement.

We use data from the first wave of the Health and Retirement Survey (HRS) to examine the marital histories of this cohort of women and men on the verge of retirement. The legacy of past increases in divorce rates is evident in the complex marital histories of HRS households and the relationship between those histories and current economic status. Couples in a first marriage now make up only one-quarter of black households and fewer than half of all white and Hispanic households. In over one-third of all married-couple households, at least one spouse had a previous marriage that ended in divorce or widowhood. These couples have significantly lower incomes and assets than couples in first marriages. Contrary to the popular notion that private and public insurance better provide for the security of widows than divorced persons, currently widowed households and couples in which the prior marriage of one spouse had ended in widowhood are no better off than are their divorced peers. This holds true for both black and white households. From a single cross-section, one cannot tell what caused these differences in income and wealth across marital status groups although it is clear that women and blacks spend a higher percentage of their lifetime outside of marriage than do men and whites. We also speculate from estimates of widowhood expectations for a subset of married respondents that underestimating the chances of widowhood--because both men and women overestimate their chances of joint survival--may be a factor in the relatively low economic status of widows. Because couples in life-long marriages have been the traditional standard upon which marital property reform and the survivorship rules of private and public programs are based, their diminishing importance among all households raises concern about the protection provided by these institutions against the long-term economic consequences of past and future marital dissolution.

Race and Education Differences in Disability Status and Labor Force Attachment in the Health and Retirement Survey

The labor force participation rates of older, working-aged black men and men with lower levels of education have historically been significantly lower than those of white men and men with more education, respectively. This paper uses data from the alpha release of the new Health and Retirement Survey (HRS) to examine the extent to which variation in health and job characteristics can account for these differences. Our analysis suggests that race and education differences in the health status of middle-aged men can explain a substantialfraction of blacklwhite differences in labor force attachment and essentially all of the gap between men with different levels of education.

Lever and spring balances

In this paper, we model gender differences in cognitive ability in China using a new sample of middle-aged and older Chinese respondents. Modeled after the American Health and Retirement Survey (HRS), CHARLS respondents are 45 years and older and are nationally representative of the Chinese population in this age span. Our measures of cognition in CHARLS rely on two measures that proxy for different dimensions of adult cognition – episodic memory and intact mental status. We relate these cognitive measures to adult health and SES outcomes during the adult years. We find large cognitive differences to the detriment of women that were mitigated by large gender differences in education among these generations of Chinese people. These gender differences in cognition are especially concentrated in the older age groups and poorer communities within the sample.We also investigated historical, geographical, and cultural characteristics of communities to understand how they impact cognition. Economic development and environmental improvement such as having electricity, increases in wage per capita and green coverage ratio generally contribute to higher cognition ability. Women benefit more from the fruits of development – electricity and growth of green coverage ratio are conducive to lessening female disadvantage in cognition.