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Health dynamics, life expectancy heterogeneity, and the racial gap in Social Security wealth

Author

Listed:
  • Foltyn, Richard

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Olsson, Jonna

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

Using biennial data from the Health and Retirement Study, we estimate agedependent 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.

Suggested Citation

  • Foltyn, Richard & Olsson, Jonna, 2024. "Health dynamics, life expectancy heterogeneity, and the racial gap in Social Security wealth," Discussion Paper Series in Economics 18/2024, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2024_018
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    More about this item

    Keywords

    Life expectancy; health dynamics; racial life expectancy gap; Social Security wealth; life cycle model;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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