Rational learning theories postulate that information channels and cognitive biases such as individual optimism may influence an individuals assessment of the risk of undesired events, especially with regard to those that have a cumulative nature. This is the case with disability in old age, which may take place upon survival to an advanced age, and such factors have been regarded as responsible for certain individual behaviours (for example, the limited incidence of insurance purchase). This paper examines the determinants of individual perceptions with regard to disability in old age and longevity. The cumulative nature of such perceptions of risk is tested, and potential biases are identified, including optimism and a set of information determinants. Empirical evidence from a representative survey of Catalonia is presented to illustrate these effects. The findings from this research suggest a significant overestimation of disability in old age, yet this is not the case with longevity. Furthermore, individual perceptions with regard to disability in old age, unlike those with regard to longevity, exhibit on aggregate an optimistic bias and, are perceived as cumulative risks. Gender influences the perceived risk of disability in old age at a population level but not at the individual level, and the opposite holds true for age. Finally, self-reported health status is the main variable behind risk perceptions at both the individual and population level.
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Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number
174.
Length: 32 pages Date of creation: 2007 Date of revision: Handle: RePEc:bar:bedcje:2007174
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Find related papers by JEL classification: I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty I12 - Health, Education, and Welfare - - Health - - - Health Production
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Li Gan & Michael D. Hurd & Daniel L. McFadden, 2005.
"Individual Subjective Survival Curves,"
NBER Chapters,
in: Analyses in the Economics of Aging, pages 377-412
National Bureau of Economic Research, Inc.
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