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The Impact of Income on Mortality: Evidence from the Social Security Notch

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  • Stephen E. Snyder
  • William N. Evans

Abstract

There is widespread and longstanding agreement that life expectancy and income are positively correlated. However, it has proven much more difficult to establish a causal relationship since income and health are jointly determined. We use a major change in the Social Security law as exogenous variation in income to examine the impact of income on mortality in an elderly population. The legislation created a notch' in Social Security benefits based upon date of birth; those born before January 1, 1917 generally receive higher benefits than those born afterwards. We compare mortality rates after age 65 for males born in the second half of 1916 and the first half of 1917. Data from restricted-use versions of the National Mortality Detail File combined with Census data allows us to count all deaths among elderly Americans between 1979 and 1993. We find that the higher income group has a statistically significantly higher mortality rate, contradicting the previous literature. We also find that the younger cohort responded to lower incomes by increasing post-retirement work effort. These results suggest that moderate employment has beneficial health effects for the elderly.

Suggested Citation

  • Stephen E. Snyder & William N. Evans, 2002. "The Impact of Income on Mortality: Evidence from the Social Security Notch," NBER Working Papers 9197, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9197
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    Cited by:

    1. David M. Cutler & Adriana Lleras-Muney & Tom Vogl, 2008. "Socioeconomic Status and Health: Dimensions and Mechanisms," NBER Working Papers 14333, National Bureau of Economic Research, Inc.
    2. Cristia, Julian P., 2009. "Rising mortality and life expectancy differentials by lifetime earnings in the United States," Journal of Health Economics, Elsevier, vol. 28(5), pages 984-995, September.
    3. Mari Rege & Kjetil Telle & Mark Votruba, 2009. "The Effect of Plant Downsizing on Disability Pension Utilization," Journal of the European Economic Association, MIT Press, vol. 7(4), pages 754-785, June.
    4. Ruhm, Christopher J., 2003. "Good times make you sick," Journal of Health Economics, Elsevier, vol. 22(4), pages 637-658, July.
    5. John R. Moran & Kosali Ilayperuma Simon, 2004. "Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts," Center for Policy Research Working Papers 66, Center for Policy Research, Maxwell School, Syracuse University.
    6. Muriel Roger & Benoît Rapoport & Thierry Magnac & Antoine Bommier, 2005. "Droits à la retraite et mortalité différentielle," Économie et Prévision, Programme National Persée, vol. 168(2), pages 1-16.
    7. Gerdtham, Ulf-G. & Ruhm, Christopher J., 2006. "Deaths rise in good economic times: Evidence from the OECD," Economics & Human Biology, Elsevier, vol. 4(3), pages 298-316, December.
    8. repec:pri:cheawb:adriana_booms is not listed on IDEAS
    9. Andreea Balan-Cohen, 2008. "Healthy, Wealthy, and Wise? The Impact of the Old Age Assistance Program on Elderly Mortality in the United States," Discussion Papers Series, Department of Economics, Tufts University 0719, Department of Economics, Tufts University.
    10. Mark E. Votruba, 2003. "Social Security and Retirees' Decision to Work," Working Papers 853, Princeton University, Department of Economics, Industrial Relations Section..
    11. Rajeev Dehejia & Adriana Lleras-Muney, 2003. "The Timing of Births: Is the Health of Infants Counter-Cyclical?," NBER Working Papers 10122, National Bureau of Economic Research, Inc.
    12. Ruhm, Christopher J., 2005. "Healthy living in hard times," Journal of Health Economics, Elsevier, vol. 24(2), pages 341-363, March.
    13. Gary V. Engelhardt & Jonathan Gruber, 2004. "Social Security and the Evolution of Elderly Poverty," NBER Working Papers 10466, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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