Reporting expected longevity and smoking: evidence from the SHARE
This paper investigates formation of expected longevity in an elderly population. We use Italian data from the early (2004) release of the Survey of Health, Ageing and Retirement in Europe (SHARE). The SHARE provides a numerical measure for subjective survival probability (SSP). To assess internal consistency and investigate validity of SSP as a proxy of actual mortality, we compare SSP to lifetables and look at the variation with health, smoking and socio-economic variables. In a multivariate framework, we propose a recursive model for expected longevity, self-assessed health and smoking duration, where health and smoking variables are potentially endogenous. Unobservable individual-specific heterogeneity is considered by estimating a finite mixture model via the EM algorithm, which allows division of the population according to different latent classes and estimation of class membership probabilities. Our mixture model fits the data better than the single class model and provides evidence of individual unobserved heterogeneity in the formulation of survival expectations. Expectations are shown to vary most with health status, socio-economic characteristics, parental mortality and age. Two-types of individuals in the population are identified, that differ in terms of unobservable frailty and rationality in addiction. We also find differences between current and former smokers in the way they discount future consequences of tobacco consumption on health and mortality risk. Our findings suggest caution in the use of SSP as a proxy of actual mortality.
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: Via S. Giorgio 12, I-09124 Cagliari|
Web page: http://www.crenos.unica.it/
More information through EDIRC
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.:
- Guiso, Luigi & Jappelli, Tullio & Pistaferri, Luigi, 2002. "An Empirical Analysis of Earnings and Employment Risk," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(2), pages 241-53, April.
- Arcidiacono, Peter & Sieg, Holger & Sloan, Frank, 2002.
"Living Rationally Under the Volcano? An Empirical Analysis of Heavy Drinking and Smoking,"
02-30, Duke University, Department of Economics.
- Peter Arcidiacono & Holger Sieg & Frank Sloan, 2007. "Living Rationally Under The Volcano? An Empirical Analysis Of Heavy Drinking And Smoking," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(1), pages 37-65, 02.
- Peter Arcidiacono & Holger Sieg & Frank Sloan, . "Living Rationally Under the Volcano? An Empirical Analysis of Heavy Drinking and Smoking," GSIA Working Papers 2003-02, Carnegie Mellon University, Tepper School of Business.
- Peter Arcidiacono & Holger Sieg & Frank Sloan, 2001. "Living Rationally Under the Volcano? An Empirical Analysis of Heavy Drinking and Smoking," NBER Working Papers 8602, National Bureau of Economic Research, Inc.
- Vincenzo Atella & Francesco Brindisi & Partha Deb & Furio C. Rosati, 2003.
"Determinants of Access to Physician Services in Italy: A Latent Class Seemingly Unrelated Probit Approach,"
CEIS Research Paper
36, Tor Vergata University, CEIS.
- Vincenzo Atella & Francesco Brindisi & Partha Deb & Furio C. Rosati, 2004. "Determinants of access to physician services in Italy: a latent class seemingly unrelated probit approach," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 657-668.
- Fabrice Etilé & Carine Milcent, 2006.
"Income-related reporting heterogeneity in self-assessed health: evidence from France,"
John Wiley & Sons, Ltd., vol. 15(9), pages 965-981.
- Fabrice Etilé & Carine Milcent, 2006. "Income-related reporting heterogeneity in self-assessed health: evidence from France," PSE Working Papers halshs-00590524, HAL.
- Fabrice Etilé & Carine Milcent, 2006. "Income-related reporting heterogeneity inself-assessed health: Evidence from France," Post-Print halshs-00754133, HAL.
- H. M. Shefrin & Richard Thaler, 1977.
"An Economic Theory of Self-Control,"
NBER Working Papers
0208, National Bureau of Economic Research, Inc.
- Deaton, A., 1998.
"Aging and Inequality in Income and Health,"
181, Princeton, Woodrow Wilson School - Development Studies.
- Martin Forster & Andrew Jones, 2000.
"The role of tobacco taxes in starting and quitting smoking: duration analysis of British data,"
176chedp, Centre for Health Economics, University of York.
- Martin Forster & Andrew M. Jones, 2001. "The role of tobacco taxes in starting and quitting smoking: Duration analysis of British data," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 164(3), pages 517-547.
- S. Balia & AM. Jones, 2004.
"Mortality, Lifestyle and Socio-Economic Status,"
Working Paper CRENoS
200416, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Silvia Balia & Andrew M Jones, 2005. "Mortality, lifestyle and socio-economic status," Health, Econometrics and Data Group (HEDG) Working Papers 05/02, HEDG, c/o Department of Economics, University of York.
- Smith, V. Kerry & Taylor, Donald H., Jr. & Sloan, Frank A., 2000.
"Longevity Expectations and Death: Can People Predict Their Own Demise?,"
00-15, Duke University, Department of Economics.
- V. Kerry Smith & Donald H. Taylor & Frank A. Sloan, 2001. "Longevity Expectations and Death: Can People Predict Their Own Demise?," American Economic Review, American Economic Association, vol. 91(4), pages 1126-1134, September.
- J. Dominitz & C. F. Manski, .
"Using expectations data to study subjective income expectations,"
Institute for Research on Poverty Discussion Papers
1050-94, University of Wisconsin Institute for Research on Poverty.
- Jeff Dominitz & Charles F. Manski, 1994. "Using Expectations Data to Study Subjective Income Expectations," NBER Working Papers 4937, National Bureau of Economic Research, Inc.
- Jeff Dominitz & Charles F. Manski, 1994. "Using Expectations Data to Study Subjective Income Expectations," Econometrics 9411003, EconWPA.
- Giucca, P. & Jappelli, T. & Terlizzese, D., 1992.
"Earning Uncertainty and Precautionary Saving,"
161, Banca Italia - Servizio di Studi.
- Agar Brugiavini & Tullio Jappelli & Guglielmo Weber, 2002. "The Survey on Health, Aging and Wealth," CSEF Working Papers 86, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- van Doorslaer, Eddy & Gerdtham, Ulf-G., 2003. "Does inequality in self-assessed health predict inequality in survival by income? Evidence from Swedish data," Social Science & Medicine, Elsevier, vol. 57(9), pages 1621-1629, November.
- Michael D. Hurd & Kathleen McGarry, 1997.
"The Predictive Validity of Subjective Probabilities of Survival,"
NBER Working Papers
6193, National Bureau of Economic Research, Inc.
- Michael D. Hurd & Kathleen McGarry, 2002. "The Predictive Validity of Subjective Probabilities of Survival," Economic Journal, Royal Economic Society, vol. 112(482), pages 966-985, October.
- Jeff Dominitz & Charles F. Manski, 2005.
"Measuring and Interpreting Expectations of Equity Returns,"
NBER Working Papers
11313, National Bureau of Economic Research, Inc.
- Jeff Dominitz & Charles F. Manski, 2011. "Measuring and interpreting expectations of equity returns," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 352-370, 04.
- van Ours, J.C., 2005.
"Dynamics in the Use of Drugs,"
2005-21, Tilburg University, Center for Economic Research.
- Michael Hurd & Daniel McFadden & Angela Merrill, 1999.
"Predictors of Mortality Among the Elderly,"
NBER Working Papers
7440, National Bureau of Economic Research, Inc.
- James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
- Mroz, Thomas A., 1999. "Discrete factor approximations in simultaneous equation models: Estimating the impact of a dummy endogenous variable on a continuous outcome," Journal of Econometrics, Elsevier, vol. 92(2), pages 233-274, October.
- Becker, Gary S & Murphy, Kevin M, 1988.
"A Theory of Rational Addiction,"
Journal of Political Economy,
University of Chicago Press, vol. 96(4), pages 675-700, August.
- Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
- Paul Frijters & John Haisken-DeNew & Michael Shields, 2005.
"Socio-Economic Status, Health Shocks, Life Satisfaction and Mortality: Evidence from an Increasing Mixed Proportional Hazard Model,"
CEPR Discussion Papers
496, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Frijters, Paul & Haisken-DeNew, John P. & Shields, Michael A., 2005. "Socio-Economic Status, Health Shocks, Life Satisfaction and Mortality: Evidence from an Increasing Mixed Proportional Hazard Model," IZA Discussion Papers 1488, Institute for the Study of Labor (IZA).
- Silvia Ferrari & Francisco Cribari-Neto, 2004. "Beta Regression for Modelling Rates and Proportions," Journal of Applied Statistics, Taylor & Francis Journals, vol. 31(7), pages 799-815.
- Athanasios Orphanides & David Zervos, 1992.
"Rational addiction with learning and regret,"
Finance and Economics Discussion Series
216, Board of Governors of the Federal Reserve System (U.S.).
- Viscusi, W Kip, 1990. "Do Smokers Underestimate Risks?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1253-69, December.
- Winston, Gordon C., 1980. "Addiction and backsliding : A theory of compulsive consumption," Journal of Economic Behavior & Organization, Elsevier, vol. 1(4), pages 295-324, December.
- Douglas, Stratford, 1998. "The Duration of the Smoking Habit," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 49-64, January.
- Douglas, Stratford & Hariharan, Govind, 1994. "The hazard of starting smoking: Estimates from a split population duration model," Journal of Health Economics, Elsevier, vol. 13(2), pages 213-230, July.
When requesting a correction, please mention this item's handle: RePEc:cns:cnscwp:200705. 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: (Antonello Pau)
If references are entirely missing, you can add them using this form.