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Subjective Health Expectations

  • Juergen Jung


    (Indiana University Bloomington)

In this paper, I derive subjective health expectations curves using the RAND-HRS data. These curves can be used in the estimation of structural life-cycle models. I first construct "health tables" from the RAND-HRS data and update subjective health expectations with information from these tables. The Bayesian updating mechanism corrects for focal point responses and reporting errors of the original health expectations variable. In addition, I test the quality of the health expectations measure and describe its correlation with various health indicators and other individual characteristics. I find that subjective health expectations do contain additional information that is not incorporated in subjective mortality expectations and that the rational expectations assumption cannot be rejected for subjective health expectations.

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Paper provided by Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington in its series Caepr Working Papers with number 2008-016.

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Length: 71 pages
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:inu:caeprp:2008-016
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