Differential Mortality in Europe and the U.S.: Estimates Based on Subjective Probabilities of Survival

39 Pages Posted: 10 Sep 2008

See all articles by Adeline Delavande

Adeline Delavande

Nova School of Business and Economics

Susann Rohwedder

RAND Corporation

Date Written: July 9, 2008

Abstract

Estimates of differential mortality by socioeconomic status play an important role in several domains: in public policy for assessing distributional effects of public programs; in financial markets for the design of life insurance and annuities; and in individual decision making when figuring out how much to save for retirement. Traditionally, reliable estimates of differential mortality require rich panel data with large sample size. This paper proposes a new, less data-intensive approach relying on just a single cross-section of data. Rather than using observations on actual mortality in panel over time, the authors propose relating individuals' subjective probabilities of survival to variables of socioeconomic status in cross-section. They formulate the method in a model of survey response and provide an empirical validation based on data from the Health and Retirement Study comparing the alternative estimates to the traditional estimates of differential mortality for the same sample of baseline respondents. They present two applications. First, they document an increase in differential mortality in the U.S. over time, and second, they produce comparable estimates of differential mortality for 10 European countries and the U.S. based on subjective probabilities of survival.

JEL Classification: J10

Suggested Citation

Delavande, Adeline and Rohwedder, Susann, Differential Mortality in Europe and the U.S.: Estimates Based on Subjective Probabilities of Survival (July 9, 2008). RAND Working Paper Series No. WR- 613, Available at SSRN: https://ssrn.com/abstract=1265705 or http://dx.doi.org/10.2139/ssrn.1265705

Adeline Delavande (Contact Author)

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal
+35 1 21 380 16 00 (Phone)
+35 1 21 387 09 33 (Fax)

HOME PAGE: http://docentes.fe.unl.pt/~adeline/page2.html

Susann Rohwedder

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

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