Probabilistic Thinking and Social Security Claiming

23 Pages Posted: 19 Feb 2008

See all articles by Adeline Delavande

Adeline Delavande

Nova School of Business and Economics

Michael Perry

affiliation not provided to SSRN

Robert J. Willis

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 2006

Abstract

This study analyzes the extent to which an individual's survival expectations influence his or her decision to claim social security benefits at an early age. We find that subjective survival probabilities capture meaningful behavioral responses to incentives for early Social Security claiming when they are purged of measurement error using risk factors as instruments. Among people who are still working at age 62, those who expect to live longer are likely to delay claiming of Social Security benefits to a degree that is both statistically and economically significant. For example, an increase of 5 percentage points in the subjective probability of survival to age 75 of each person leads to a 1.9 percentage point decline in the proportion who claim before age 64, from 29.6 percent to 27.7 percent.

Suggested Citation

Delavande, Adeline and Perry, Michael and Willis, Robert J., Probabilistic Thinking and Social Security Claiming (September 2006). Michigan Retirement Research Center Research Paper No. WP 2006-129, Available at SSRN: https://ssrn.com/abstract=1095002 or http://dx.doi.org/10.2139/ssrn.1095002

Adeline Delavande (Contact Author)

Nova School of Business and Economics ( email )

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Michael Perry

affiliation not provided to SSRN ( email )

Robert J. Willis

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States