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An empirical analysis of the importance of controlling for unobserved heterogeneity when estimating the income-mortality gradient

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  • Adriaan Kalwij

    (Universiteit Utrecht)

Abstract

Background: Statistical theory predicts that failing to control for unobserved heterogeneity in a Gompertz mortality risk model attenuates the estimated income-mortality gradient toward zero. Objective: I assess the empirical importance of controlling for unobserved heterogeneity in a Gompertz mortality risk model when estimating the income-mortality gradient. The analysis is carried out using individual-level administrative data from the Netherlands over the period 1996-2012. Methods: I estimate a Gompertz mortality risk model in which unobserved heterogeneity has a gamma distribution and left-truncation of life durations is explicitly taken into account. Results: I find that, despite a strong and significant presence of unobserved heterogeneity in both the male and female samples, failure to control for unobserved heterogeneity yields only a small and insignificant attenuation bias in the negative income-mortality gradient. Conclusions: The main finding, a small and insignificant attenuation bias in the negative income-mortality gradient when failing to control for unobserved heterogeneity, is positive news for the many empirical studies, whose estimations of the income-mortality gradient ignore unobserved heterogeneity.

Suggested Citation

  • Adriaan Kalwij, 2014. "An empirical analysis of the importance of controlling for unobserved heterogeneity when estimating the income-mortality gradient," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 31(30), pages 913-940.
  • Handle: RePEc:dem:demres:v:31:y:2014:i:30
    DOI: 10.4054/DemRes.2014.31.30
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    File URL: https://www.demographic-research.org/volumes/vol31/30/31-30.pdf
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    References listed on IDEAS

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    Cited by:

    1. Grevenbrock, Nils & Groneck, Max & Ludwig, Alexander & Zimper, Alexander, 2018. "Cognition, Optimism and the Formation of Age-Dependent Survival Beliefs," MEA discussion paper series 201801, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    2. Beáta Gavurová & Viliam Kováč & Tatiana Vagašová, 2017. "Standardised mortality rate for cerebrovascular diseases in the Slovak Republic from 1996 to 2013 in the context of income inequalities and its international comparison," Health Economics Review, Springer, vol. 7(1), pages 1-12, December.
    3. Virginia Zarulli, 2016. "Unobserved Heterogeneity of Frailty in the Analysis of Socioeconomic Differences in Health and Mortality," European Journal of Population, Springer;European Association for Population Studies, vol. 32(1), pages 55-72, February.

    More about this item

    Keywords

    proportional hazards; unobserved heterogeneity; mortality; income;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • Z0 - Other Special Topics - - General

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