Subjective Survival Probabilities Research Articles

Pain Lowers Subjective Survival Probabilities among Middle-aged and Older Adults.

Pain is a leading cause of disability and a limiting factor in individuals' assessments of their own subjective health, however its association with subjective longevity has yet to be explored. Subjective survival probabilities (SSPs), or one's own perceived chances of living to a given age, can influence individuals' behavior as they plan for their futures. This study assesses whether pain correlates to lower SSPs. We use a repeated cross-section of the 2000-2018 waves of the Health and Retirement Study, a longitudinal and nationally representative survey of Americans aged 51 and older (N=31,773). Fractional logit regressions indicate that, across all age groups, respondents with severe and/or interfering pain reported significantly lower SSPs than those with no pain (Marginal Effect (ME) = -0.03 to -0.06, p < .05). Controlling for all covariates, mild or moderate non-interfering pain was only associated with a significant reduction in SSPs among the youngest group reporting their chances of living to age 75 (ME = -0.02, p < .001). Descriptively and in the model results, respondents with mild or moderate non-interfering pain appeared to more closely resemble pain-free respondents than those with severe or interfering pain. These findings highlight the importance of pain on SSPs, and contribute to the growing evidence that pain interference is uniquely important in predicting meaningful health outcomes.

Survival Pessimism and the Demand for Annuities

AbstractThe “annuity puzzle” refers to the fact that annuities are rarely purchased despite the longevity insurance they provide. Most explanations for this puzzle assume that individuals have accurate expectations about their future survival. We provide evidence that individuals misperceive their mortality risk and study the demand for annuities in a setting where annuities are priced by insurers on the basis of objectively-measured survival probabilities but in which individuals make purchasing decisions based on their own subjective survival probabilities. Subjective expectations have the capacity to explain significant rates of nonannuitization, yielding a quantitatively important explanation for the annuity puzzle.

Eudaimonic wellbeing and life expectancy

AbstractWe investigate the relationship between eudaimonic wellbeing (sense of life) and subjective survival probability (SSP), a proxy for self‐assessed life expectancy. Our econometric analysis uses 220,601 observations of SHARE panel data from 2006 to 2015. We find evidence of a robust and strong positive relationship between eudaimonic wellbeing and subjective survival probability after controlling for self‐assessed health, coupled with a negative effect of sense of life on mortality. The magnitude of the first effect is relevant, since the minimum difference (adjusted for fixed effects) between individuals declaring the highest versus the lowest sense of life is a 7‐point higher self‐assessed probability of being alive at the target age. Together, our two main findings imply that when respondents declare a high sense of life, they self‐report a lower mortality risk and their predictions are correct.

Testing methods to enhance longevity awareness

Many people do not understand the concepts of life expectancy and longevity risk, potentially leading them to under-save for retirement or to not purchase longevity insurance, which in turn could reduce wellbeing at older ages. We investigate alternative ways to increase the salience of both concepts, allowing us to assess whether these change peoples’ perceptions and financial decision making. Using randomly-assigned vignettes providing subjects with information about either life expectancy or longevity, we show that merely prompting people to think about financial decisions changes their perceptions regarding subjective survival probabilities. Moreover, this information also boosts respondents’ interest in saving and demand for longevity insurance. In particular, longevity information influences both subjective survival probabilities and financial decisions, while life expectancy information influences only annuity choices. We provide some evidence that many people are simply unaware of longevity risk.

Emergency-aid for self-employed in the Covid-19 pandemic: A flash in the pan?

The self-employed faced strong income losses during the Covid-19 pandemic. Many governments introduced programs to financially support the self-employed during the pandemic, including Germany. The German Ministry for Economic Affairs announced a €50bn emergency-aid program in March 2020, offering one-off lump-sum payments of up to €15,000 to those facing substantial revenue declines. By reassuring the self-employed that the government ‘would not let them down’ during the crisis, the program had also the important aim of motivating the self-employed to get through the crisis. We investigate whether the program affected the confidence of the self-employed to survive the crisis using real-time online-survey data comprising more than 20,000 observations. We employ propensity score matching, making use of a rich set of variables that influence the subjective survival probability as main outcome measure. We observe that this program had significant effects, with the subjective survival probability of the self-employed being moderately increased. We reveal important effect heterogeneities with respect to education, industries, and speed of payment. Notably, positive effects only occur among those self-employed whose application was processed quickly. This suggests stress-induced waiting costs due to the uncertainty associated with the administrative processing and the overall pandemic situation. Our findings have policy implications for the design of support programs, while also contributing to the literature on the instruments and effects of entrepreneurship policy interventions in crisis situations.

Correlates of quality of life, happiness and life satisfaction among European adults older than 50 years: A machine‐learning approach

Background and objectivesPrevious research has documented the role of different categories of psychosocial factors (i.e., sociodemographic factors, personality, subjective life circumstances, activity, physical health, and childhood circumstances) in predicting subjective well-being and quality of life among older adults. No previous study has simultaneously modeled a large number of these psychosocial factors using a well-powered sample and machine learning algorithms to predict quality of life, happiness, and life satisfaction among older adults. The aim of this paper was to investigate the correlates of quality of life, happiness, and life satisfaction among European adults older than 50 years using machine learning techniques. Research design and methodsData drawn from the Survey of Health, Ageing and Retirement in Europe (SHARE) Wave 7 were used. Participants were 62,500 persons aged 50 years and over living in 26 Continental EU Member States, Switzerland, and Israel. Multiple machine learning regression approaches were used. ResultsThe algorithms captured 53%, 33%, and 18% of the variance of quality of life, life satisfaction, and happiness, respectively. The most important categories of correlates of quality of life and life satisfaction were physical health and subjective life circumstances. Sociodemographic factors (mostly country of residence) and psychological variables were the most important categories of correlates of happiness. Discussion and implicationsThis study highlights subjective poverty, self-perceived health, country of residence, subjective survival probability, and personality factors (especially neuroticism) as important correlates of quality of life, happiness, and life satisfaction. These findings provide evidence-based recommendations for practice and/or policy implications.

Quantifying self-rated age

Chronological age, in conjunction with population life tables, is widely used for estimating future life expectancy. The aims of this study are to estimate a subjective ageing indicator, namely self-rated age, and to evaluate its concurrent validity in comparison with other age indicators: subjective survival probabilities, subjective age, and biological age. We use data from the Wave 6 of the Survey of Health, Ageing and Retirement in Europe, Wave 12 of the Health and Retirement Study in the United States, and life tables from the Human Mortality Database. For the statistical analysis we use multinomial regression models. Our results indicate that health status and frequency of physical activities imply similar patterns of self- rated age, subjective survival probabilities, subjective age, and biological age. However, the impact of cognitive function differs by geographical region. Self-rated age can be interpreted as a subjective adjustment that better reflects the ageing process.

Forecasting mortality inequalities in the U.S. based on trends in midlife health

Recent literature has documented a widening gap in mortality between older individuals of high versus low socioeconomic status (SES) in the U.S. This paper investigates whether this trend will continue. We analyze the health status of successive cohorts of 54–60-year-old U.S. individuals born between 1934 and 1959 and use a rich set of health indicators to forecast life expectancies. The detailed health measures come from the longitudinal Health and Retirement Study. We find that many health indicators have worsened recently. For example, rates of obesity, diabetes, and self-reported levels of pain sharply increased between 1992 and 2016. Directly relevant for mortality, recent cohorts report lower subjective survival probabilities. Using Social Security wealth as an SES indicator, we find strong evidence for increasing health inequalities. We predict overall life expectancy to increase further; but the increase will be concentrated among higher SES individuals and mortality inequality will continue to increase.

Apparent age and gender differences in survival optimism: To what extent are they a bias in the translation of beliefs onto a percentage scale?

AbstractA standard way to elicit expectations asks for the percentage chance an event will occur. Previous research demonstrates noise in reported percentages. The current research models a bias; a five percentage point change in reported probabilities implies a larger change in beliefs at certain points in the probability distribution. One contribution of my model is that it can parse bias in beliefs from biases in reports. I reconsider age and gender differences in Subjective Survival Probabilities (SSPs). These are generally interpreted as differences in survival beliefs, e.g., that males are more optimistic than females and older respondents are more optimistic than younger respondents. These demographic differences (in the English Longitudinal Study of Ageing) can be entirely explained by reporting bias. Older respondents are no more optimistic than younger respondents and males are no more optimistic than females. Similarly, in forecasting, information is obscured by taking reported percentages at face value. Accounting for reporting bias thus better exploits the private information contained in reports. Relative to a face-value specification, a specification that does this delivers improved forecasts of mortality events, raising the pseudo R-squared from less than 3 percent to over 6 percent.

I am a survivor, keep on surviving: early-life exposure to conflict and subjective survival probabilities in adult life

Life-course studies have shown that early-life conditions predict health and socio-economic status in adult life. This study analyzes whether experiencing a traumatic event in childhood, i.e., the Second World War (WW2), affects subjective survival probabilities (SSPs). We rely on a representative sample of European adults who were differentially exposed to WW2 during childhood as a result of their date and place of birth. Results show that exposure to WW2 increases SSPs, with socio-economic and health characteristics not playing a mediating role. War exposure also counterbalances the adverse effects of health impairments on SSPs, but it does not affect health outcomes per se. This fact, jointly with low mortality rates of the cohort under investigation, suggests that selective mortality and post-traumatic stress are not the main channels. Instead, the results support the hypothesis that personal growth and life appreciation emerge after traumatic events, thereby leading to optimistic perceptions of longevity.

Emergency Aid for Self-Employed in the COVID-19 Pandemic: A Flash in the Pan?

The self-employed are among those facing the highest probability of strong income losses during the COVID-19 pandemic. Governments in many countries introduced support programs to support the self-employed, including the German federal government, which approved a €50bn emergency aid program at the end of March 2020 offering one-off lump-sum payments of up to €15,000 to those facing substantial revenue declines. In this contribution, we investigate the impact of this program using a real-time online-survey data with a total of more than 20,000 observations. We employ propensity score matching, making use of a rich set of variables that influence selection into the treatment and the outcome variable, the subjective survival probability. We observe that the emergency aid program had significant effects, with the subjective survival probability of self-employment being moderately increased. We further reveal important effect heterogeneities with respect to education, risk tolerance, and industries. We also observe positive effects only among those whose application was processed within a few days. Lastly, the positive effect on the survival probability is fading out already two weeks after the emergency aid was granted. Our findings have important policy implications for the design of such support programs in the course of this crisis.

Perceptions of Mortality: Individual Assessments of Longevity Risk

Financially successful retirement depends in large part on managing longevity risk: individuals need to save during their working lives to cover expenses in retirement, and then they must spend down those savings carefully so as not to outlive their assets. Despite the centrality of individuals’ expectations regarding life expectancy, little is known about how longevity expectations are formed and how they evolve as individuals age. This paper assesses the evolution of subjective survival probabilities, defined as the probabilities that people believe they will live to at least 75 or 85 years of age. I examine the correlates of these reported probabilities when initially measured, how they change over time, and in particular, how they change with major life course events like the death of a parent, in-law, spouse, or sibling. I also examine how the subjective probabilities change in response to health shocks such as a heart attack or diagnosis of diabetes.

Factors incorporated into future survival estimation among Europeans

Background: Subjective survival probabilities are affected by individual-specific judgment and vary by factors known to differentiate actual mortality.

Testing Methods to Enhance Longevity Awareness

Many people have only a vague notion of the concept of life expectancy and the longevity risk they face at older ages, which in turn implies that they are likely to undersave for retirement. This paper employs an online experiment to investigate alternative ways to describe both life expectancy and longevity risk, with the goal of assessing whether these can raise peoples’ awareness of possible retirement shortfalls. We also evaluate whether providing this information promotes interest in saving activity and demand for longevity insurance products. We find that providing longevity risk information impacts respondents’ subjective survival probabilities, while simply describing average life expectancy does not. Yet providing life expectancy or longevity information significantly affects financial decisions, mostly regarding annuitization. Interestingly, we also find that merely prompting people to think about financial decisions changes their perceptions regarding subjective survival probabilities.

Survival Pessimism and the Demand for Annuities

Abstract The “annuity puzzle” refers to the fact that annuities are rarely purchased despite the longevity insurance they provide. Most explanations for this puzzle assume that individuals have accurate expectations about their future survival. We provide evidence that individuals misperceive their mortality risk, and study the demand for annuities in a setting where annuities are priced by insurers on the basis of objectively-measured survival probabilities but in which individuals make purchasing decisions based on their own subjective survival probabilities. Subjective expectations have the capacity to explain significant rates of non-annuitization, yielding a quantitatively important explanation for the annuity puzzle.

Wealth and the effect of subjective survival probability

The life cycle hypothesis predicts that a longer life expectancy should, ceteris paribus, lead to the accumulation of more wealth during a working life to fund consumption in retirement. The prediction is tested by examining whether subjective survival probability (SSP)—a proxy measure of self-assessed life expectancy—affects retirement wealth among the pre-retirement older population in Ireland. The estimated relationship is complicated due to the correlation between SSP and life table estimates of life expectancy. SSP is instrumented to address measurement error and reverse causality. The findings suggest that a higher SSP increases retirement wealth.

Trends in Health and Mortality Inequalities in the United States

Recent literature has documented a widening gap in mortality in the United States between individuals with high socioeconomic status (SES) and low SES. An important question is whether this trend will continue. In this paper we document trends and inequalities in the health status at ages 54 to 60 of individuals born between 1934 and 1959. We do so by using detailed subjective and objective measures of health in the Health and Retirement Study to examine contributors to mortality inequality and to forecast life expectancy. We found that the health of individuals 54 to 60 years old has generally declined in recent years. In particular, we found large increases in obesity rates, notable increases in diabetes and reported levels of pain, and lower self-reported health and subjective survival probabilities. We also found strong evidence for increasing health inequalities, as the health of individuals in these cohorts with high SES remained largely stable while that for individuals with low SES declined. When we forecast life expectancies using these predictor variables, as well as gender- and SES-specific time trends, we predict overall life expectancy to increase further. However, the increase is concentrated among high SES individuals, suggesting growing mortality inequality. Results are similar among men and women.

Asset Allocation of Two‐Person Households under Different Longevity Expectations

This study examines asset allocations of near‐elderly couples when spouses have different longevity expectations. Since the risk‐adjusted return on equities increases with investment horizon, a spouse who expects longer retirement period has an incentive to hold riskier portfolio. Using data from the Health and Retirement Study, we show that portfolio riskiness increases with the subjective survival probability of the decision‐making spouse. As predicted by the bargaining model, portfolio outcomes are uncorrelated with the horizon of the spouse who has less bargaining power. Results also show that the extent expected horizon is incorporated into asset allocation depends on the decider's gender. The share of equities depends on the husband's expected horizon when he leads decision making but not on the wife's horizon when she has more power. These findings contradict the prediction that wife‐led households may hold more equities than do husband‐led households because of their longer lifespan.

Smoking, education and the ability to predict own survival probabilities

Abstract Subjective survival probabilities (SSPs) are a good predictor of mortality, go beyond the aggregate description of survival defined by life tables, and are important for individuals’ decision-making in later life. However, despite the well-known mortality differentials by education as well as by characteristics such as smoking, little investigation has focused on SSPs by population sub-groups defined as a combination of these two characteristics. We use data on individuals aged 50–89 from the Health and Retirement Study (HRS) carried out in the USA between 2000 and 2012 (N = 23,895). Respondents were asked to assess the probability to survive to a given target age according to their age at the time of the survey. We assess how individuals’ SSPs and estimated objective survival probabilities (OSPs) vary by education and smoking and calculate, for each respondent, the gap between them. Consistently with real mortality patterns, smokers report the lowest SSPs in each of the three considered education groups. When comparing SSPs and OSPs we find that all groups tend to underestimate survival. Within each education group, past smokers better predict their survival probability. Current smokers with low education show the highest probability to overestimate their survival. Smokers are aware of their lower life expectancy. Still, a considerable proportion of them overestimate their survival probabilities, independently of their level of education.

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