Scandinavian Working Papers in Economics
Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics
No 18/2024: Health dynamics, life expectancy heterogeneity, and the racial gap in Social Security wealth
Richard Foltyn () and Jonna Olsson ()
Additional contact information
Richard Foltyn: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Jonna Olsson: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
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.
Keywords: Life expectancy; health dynamics; racial life expectancy gap; Social Security wealth; life cycle model
Language: English
116 pages, October 28, 2024
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