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Individual Subjective Survival Curves

In: Analyses in the Economics of Aging

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  • Li Gan
  • Michael D. Hurd
  • Daniel L. McFadden

Abstract

Testing life-cycle models and other economic models of saving and consumption at micro level requires knowledge of individuals' subjective believes of their mortality risk. Previous studies have shown that individual responses on subjective survival probabilities are generally consistent with life tables. However, survey responses suffer serious problems caused by focal responses of zero and one. This paper suggests using a Bayesian update model that accounts for the problems encountered in focal responses. We also propose models that help us to identify how much each individual deviates from life table in her subjective belief. The resulting individual subjective survival curves have considerable variations and are readily applicable in testing economic models that require individual subjective life expectancies.
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Suggested Citation

  • Li Gan & Michael D. Hurd & Daniel L. McFadden, 2005. "Individual Subjective Survival Curves," NBER Chapters, in: Analyses in the Economics of Aging, pages 377-412, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:10367
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    References listed on IDEAS

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    1. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1995. "Precautionary Saving and Social Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 360-399, April.
    2. Daniel S. Hamermesh, 1985. "Expectations, Life Expectancy, and Economic Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(2), pages 389-408.
    3. Michael D. Hurd & Kathleen McGarry, 1993. "Evaluation of Subjective Probability Distributions in the HRS," NBER Working Papers 4560, National Bureau of Economic Research, Inc.
    4. Michael D. Hurd & Daniel L. McFadden & Li Gan, 1998. "Subjective Survival Curves and Life Cycle Behavior," NBER Chapters, in: Inquiries in the Economics of Aging, pages 259-309, National Bureau of Economic Research, Inc.
    5. William F. Bassett & Robin L. Lumsdaine, 2001. "Probability Limits: Are Subjective Assessments Adequately Accurate?," Journal of Human Resources, University of Wisconsin Press, vol. 36(2), pages 327-363.
    6. Hurd, Michael D, 1989. "Mortality Risk and Bequests," Econometrica, Econometric Society, vol. 57(4), pages 779-813, July.
    7. Manski, Charles F., 1993. "Dynamic choice in social settings : Learning from the experiences of others," Journal of Econometrics, Elsevier, vol. 58(1-2), pages 121-136, July.
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    More about this item

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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