Advanced Search
MyIDEAS: Login to save this paper or follow this series

Retirement Expectations Formation Using the Health and Retirement Study

Contents:

Author Info

  • Hugo Benitez-Silva

    ()

  • Debra Dwyer

    ()

Abstract

This paper examines how a wide array of factors (household and individual level financial, health and other taste shifter characteristics) influence retirement plans over time and how uncertainty affects the strategies that individuals use to plan their retirement years. Using panel data models we examine the role of health and economic factors on retirement planning using the Health and Retirement Study (HRS). We examine the rationality of plans for retirement controlling for sample selection. After controlling for sample selection, reporting biases, and unobserved heterogeneity we find that plans for retirement do follow the random walk hypothesis and pass tests of weak and strong rationality. These findings allow us to assume rationality and examine retirement plans using first differences. We then examine changes to those factors and the effects of new information on plans and find that new information contributes little to changes in plans. This leads us to conclude that on average people correctly form expectations over uncertain events when planning for retirement. These results have important implications for a wide variety of models in economics that assume rational behavior. Classification-JEL: J26, J22, C23,D84 Keywords: Expectations, Retirement, Panel Data with selection, rationality

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sunysb.edu/economics/research/papers/2002/02-04.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Stony Brook University, Department of Economics in its series Department of Economics Working Papers with number 02-04.

as in new window
Length: 41
Date of creation: 18 Jun 2002
Date of revision: 18 Jun 2002
Handle: RePEc:nys:sunysb:02-04

Contact details of provider:
Postal: Stony Brook, NY 11794-4384
Phone: (631)632-7540
Fax: (631)632-7516
Email:
Web page: http://www.stonybrook.edu/economics
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. B. Douglas Bernheim, 1990. "How Do the Elderly Form Expectations? An Analysis of Responses to New Information," NBER Chapters, in: Issues in the Economics of Aging, pages 259-286 National Bureau of Economic Research, Inc.
  2. John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998. "The Dynamic Effects of Health on the Labor Force Transitions of Older Workers," NBER Working Papers 6777, National Bureau of Economic Research, Inc.
  3. John Rust & Christopher Phelan, 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Public Economics 9406005, EconWPA, revised 06 Jul 1994.
  4. Verbeek, M.J.C.M. & Nijman, T.E., 1990. "Testing for selectivity bias in panel data models," Discussion Paper 1990-18, Tilburg University, Center for Economic Research.
  5. Vella, Francis & Verbeek, Marno, 1999. "Two-step estimation of panel data models with censored endogenous variables and selection bias," Journal of Econometrics, Elsevier, vol. 90(2), pages 239-263, June.
  6. B. Douglas Bernheim, 1987. "The Timing of Retirement: A Comparison of Expectations and Realizations," NBER Working Papers 2291, National Bureau of Economic Research, Inc.
  7. Olivia S. Mitchell & Gary S. Fields, 1983. "The Economics of Retirement Behavior," NBER Working Papers 1128, National Bureau of Economic Research, Inc.
  8. Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Testing for selectivity in panel data models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153280, Tilburg University.
  9. Debra Sabatini Dwyer & Olivia S. Mitchell, 1998. "Health Problems as Determinants of Retirement: Are Self-Rated Measures Endogenous?," NBER Working Papers 6503, National Bureau of Economic Research, Inc.
  10. Robin L. Lumsdaine & Olivia S. Mitchell, . "New Developments in the Economic Analysis of Retirement," Pension Research Council Working Papers 98-8, Wharton School Pension Research Council, University of Pennsylvania.
  11. Debra S. Dwyer & Jianting Hu, . "Retirement Expectations and Realizations: The Role of Health Shocks and Economic Factors," Pension Research Council Working Papers 98-18, Wharton School Pension Research Council, University of Pennsylvania.
  12. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  13. Ekaterini Kyriazidou, 1997. "Estimation of a Panel Data Sample Selection Model," Econometrica, Econometric Society, vol. 65(6), pages 1335-1364, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Barrett, Alan & Mosca, Irene, 2012. "Announcing an Increase in the State Pension Age and the Recession: Which Mattered More for Expected Retirement Ages?," IZA Discussion Papers 6325, Institute for the Study of Labor (IZA).
  2. Deborah A. Cobb-Clark & Steve Stillman, 2006. "The Retirement Expectations of Middle-Aged Individuals," CEPR Discussion Papers 540, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  3. Julia Lynn Coronado & Maria Perozek, 2003. "Wealth effects and the consumption of leisure: retirement decisions during the stock market boom of the 1900s," Finance and Economics Discussion Series 2003-20, Board of Governors of the Federal Reserve System (U.S.).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nys:sunysb:02-04. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.