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The limited power of socioeconomic status to predict lifespan: Implications for pension policy

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  • Baurin, Arno

Abstract

Differences in life expectancy across socioeconomic status are well known and many economists argue that they should be taken into account when designing pension systems. This paper analyses the relevance of using socioeconomic characteristics to differentiate the retirement age. Using US mortality rates assembled by Chetty et al. (2016), we simulate the lifespan distribution both across and within socioeconomic categories. Then, we analyze these categories’ ability to predict the lifespan of individuals. Results suggest that socioeconomic status has a relatively limited predictive power, due to the huge lifespan heterogeneity “within” each of them.

Suggested Citation

  • Baurin, Arno, 2021. "The limited power of socioeconomic status to predict lifespan: Implications for pension policy," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).
    • Handle: RePEc:eee:joecag:v:20:y:2021:i:c:s2212828x21000323
    DOI: 10.1016/j.jeoa.2021.100339
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    1. Marc Fleurbaey & Marie‐Louise Leroux & Pierre Pestieau & Gregory Ponthiere, 2016. "Fair Retirement Under Risky Lifetime," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(1), pages 177-210, February.
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    5. Leroux, Marie-Louise & Pestieau, Pierre & Ponthière, Grégory, 2015. "Longévité différentielle et redistribution : enjeux théoriques et empiriques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 91(4), pages 465-497, Décembre.
    6. Pestieau, Pierre & Racionero, Maria, 2016. "Harsh occupations, life expectancy and social security," Economic Modelling, Elsevier, vol. 58(C), pages 194-202.
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    Cited by:

    1. Vincent Vandenberghe, 2021. "Partial De-Annuitization of Public Pensions v.s. Retirement Age Differentiation. Which is Best to Account for Longevity Differences?," LIDAM Discussion Papers IRES 2021029, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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    More about this item

    Keywords

    Pension policy; Pension progressivity; Lifespan; Tagging;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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