DP9123 Heterogeneity in Expected Longevities

Author(s): Josep Pijoan-Mas, José-Víctor Ríos-Rull
Publication Date: September 2012
Keyword(s): heterogeneity in mortality rates, inequality in health, life expectancies
JEL(s): I14, I24, J12, J14
Programme Areas: International Macroeconomics, Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9123

We develop a new methodology to compute di fferences in the expected longevity of individuals who are in different socioeconomic groups at age 50. We deal with the two main problems associated with the standard use of life expectancy: that people's socioeconomic characteristics evolve over the life cycle and that there is a time trend that reduces mortality over time. Using HRS data we uncover an enormous amount of heterogeneity in expected longevities between individuals in di fferent socioeconomic groups. Additionally, our analysis allows us to provide an answer to the old question of how health protecting are education, wealth and marital status. To do so, we decompose the longevity di fferentials into differences in health at age 50, differences in the evolution of health with age, and di fferences in mortality conditional on health. Remarkably, the latter is the least important for most socioeconomic characteristics. In particular, education and wealth are health protecting but have very little impact on two-year mortality rates conditional on health. Finally, we document an increasing time trend of the socioeconomic gradient of longevity in the period 1992-2008, and a likely increase in the socioeconomic gradient of mortality rates in the near future. Last but not least, we show that the longevity di fferences that we find have welfare implications that dwarf the di fferences in consumption accruing to people in di efferent socioeconomic groups.