Probabilistic Thinking and Early Social Security Claiming
This study analyzes the extent to which an individual’s survival expectations influence his or her decision to claim social security benefits at an early age. We find that subjective survival probabilities capture meaningful behavioral responses to incentives for early Social Security claiming when they are purged of measurement error using risk factors as instruments. Among people who are still working at age 62, those who expect to live longer are likely to delay claiming of Social Security benefits to a degree that is both statistically and economically significant. For example, an increase of 5 percentage points in the subjective probability of survival to age 75 of each person leads to a 1.9 percentage point decline in the proportion who claim before age 64, from 29.6 percent to 27.7 percent.
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"Expectations, Life Expectancy, and Economic Behavior,"
NBER Working Papers
0835, National Bureau of Economic Research, Inc.
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"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.
- Michael D. Hurd & James P. Smith & Julie M. Zissimopoulos, 2004.
"The effects of subjective survival on retirement and Social Security claiming,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 19(6), pages 761-775.
- Michael Hurd & James P. Smith & Julie M. Zissimopoulos, 2003. "The Effects of Subjective Survival on Retirements and Social Security Claiming," Working Papers 03-11, RAND Corporation Publications Department.
- Michael D. Hurd & James P. Smith & Julie M. Zissimopoulos, 2002. "The Effects of Subjective Survival on Retirement and Social Security Claiming," NBER Working Papers 9140, National Bureau of Economic Research, Inc.
- Michael D. Hurd & James P. Smith & Julie M. Zissimopoulos, 2002. "The Effects of Subjective Survival on Retirement and Social Security Claiming," Working Papers wp021, University of Michigan, Michigan Retirement Research Center.
- Gábor Kézdi & Robert J. Willis, 2003. "Who Becomes a Stockholder? Expectations, SUbjective Uncertainty, and Asset Allocation," Working Papers wp039, University of Michigan, Michigan Retirement Research Center.
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