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Transcript of 1 Health and Ageing-Lifetime Research: Longitudinal Studies from Home and Away Whitlam Institute...
Health andRetirement Study
1
Health and Ageing-Lifetime Research:Longitudinal Studies from Home and Away
Whitlam Institute Forum30 September, 2003
Robert J. Willis
University of Michigan
Health andRetirement Study
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1. Demographic Trends in Australia Similar to those in U.S. and Europe
• World wide trends of declining fertility, increasing length of life imply– Slower rate of population growth – Population aging
• Intergenerational transfers used to support economic welfare and health care for elderly– Role of family– Public sector taxes and transfers
• Changing age structure makes existing welfare state programs infeasible in the long run
• Search for sustainable policies
Health andRetirement Study
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Economic Implications of Slower Population Growth: The Good News
• Slower population growth provides potential for higher per capita economic welfare– Given rate of saving creates more physical capital per person– Given rate of investment in education creates workers with
more human capital per person
• Implies feasible lifetime income and consumption is higher when population growth is slower
Health andRetirement Study
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Economic Implications of Slower Population Growth: The Bad News
• Sustainability of social welfare programs financed by tax and transfer schemes is threatened by population aging– Social security/Medicare represent transfers from younger to
older generations– Population aging implies that a given rate of taxation of
workers who maintain a given age schedule of labor supply will not produce revenues sufficient to maintain a given level of transfers to retired elderly
Health andRetirement Study
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Intergenerational Report Priorities: Fiscal Sustainablity of Health Care Depends on
Savings and Employment
1. Balanced budget, government debt low2. Efficient and effective medical health system,
complemented by widespread participation in private health insurance
3. Containing growth in the Pharmaceutical Benefit Scheme (PBS)
4. Affordable and effective residential aged care system5. Preserving a well-targeted safety net
6. Encouraging mature age employment7. Encouraging private saving for retirement
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2. Consequences of Social Welfare and Retirement Policy In Developed Countries for Employment
Health andRetirement Study
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Trends in Labor Force Attachment of Older Men
Source: J. Gruber and D. Wise, Social Security Programs and Retirement Around the World, U. Chicago Press, 1999.
Health andRetirement Study
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Retirement Policy Shapes Retirement Behavior
Source: J. Gruber and D. Wise, Social Security and Retirement Around the World (NBER, 2000)
Percent Penalty for Continued Work
Per
cen
t E
arly
Ret
irem
ent
20 40 60 80 100
30
40
50
60
70
USSweden
CanadaSpain
Germany
UK
FranceHolland
Belgium
Italy
Health andRetirement Study
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Excel
lent
V Good
GoodFai
r
Poor
Poor
Fair
Good
V Good
Excellent
0
100
200
300
400
500
Net
Wo
rth
(in
Th
ou
san
ds)
Wife's Health
Husband's Health
Mean Net Worth by Health of Husband and Wife
Source: Robert J. Willis, “Theory confronts data: how the HRS is shaped by the economics of aging and how the economics of aging will be shaped by the HRS,” Labour Economics, Volume 6, No. 2, page 119, June, 1999.
Health andRetirement Study
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Causal Directions?
•Wealth Causes Health–Early life experiences–Social gradient–Access to medical care
•Health Causes Wealth–Affects long run human capital accumulation–Health shocks disrupt work/earnings–Health shocks lead to (uninsured) medical costs
•Health and Wealth Caused by Third Factor–Rate of time discount (willingness to defer satisfaction)
�More weight on future leads to more education, higher earnings, higher savings rate, better healthhabits leading to correlation between health and wealth
Health andRetirement Study
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New Health Problem in 1992Reduces Wealth between 1992-1996
HRS (People 51-60)
-3,620
635
-16,846
2,266
-20,000
-15,000
-10,000
-5,000
0
5,000
Wealth Medical Expenses
Th
ou
sa
nd
s o
f D
olla
rs
Mild onset
Severe onset
Source: James P. Smith. "Healthy Bodies and Thick Wallets," Journal of Economic Perspectives 1999.
Health andRetirement Study
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New Health Problem in 1993 Reduces Wealth from 1993 to 1995
AHEAD (people 70+)
-10,481
1,026
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
Wealth Medical Expenses
Do
llars
Source: James P. Smith. "Healthy Bodies and Thick Wallets," Journal of Economic Perspectives 1999.
4. Challenge of Dementia in an Ageing Population
• Lower mortality
• Rapid growth of oldest old
• Lower fertility
• Increased relative number of older to younger persons
• Increased cost to taxpayers
Health andRetirement Study
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Rapid Growth Of Oldest Old
Source: Frank B. Hobbs with Bonnie L. Damon, 65+ in the United States, U.S. Department of Commerce -- Economics and Statistics Administration and Bureau of the Census and U.S. Department of Health and Human Services -- National Institute on Aging, page 2-8, April, 1996
Population 85 and Over: 1900-2050
0.1 0.2 0.2 0.3 0.4 0.6 0.9 1.4 2.2
18.9
34.3
67
8.8
13.8
0
5
10
15
20
1900 1920 1940 1960 1980 2000 2020 2040
(in
mill
ion
s)
Health andRetirement Study
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Severe Cognitive Limitation by Age and Gender
0%
5%
10%
15%
20%
25%
51-54 55-59 60-64 65-69 70-74 75-79 80-84 85+
Age
Pe
rce
nt
Males
Females
Total
Source: Mary Beth Ofstedal: Health and Retirement Survey 1998 (N= 13,093) Definition of severe cognitive impairment: Errors on half or more of 9 very easy items from a standard geriatric screen for mental status for self-respondents; IQCODE score of 3.9 or higher on Jorm proxy assessment.
Health andRetirement Study
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Informal Care: Adjusted Weekly Hours, by Severity of Cognitive Limitation
05
1015202530354045
NormalCognition
Mild Moderate Severe
Severity of Cognitive Limitation
Ho
urs
of
Car
e
Langa K, Kabeto M, Herzog AR, Chernew M, Ofstedal MB, Willis R, Wallace R, Mucha L, Straus W, Fendrick AM. “The quantity and cost of informal caregiving for the elderly with dementia: Estimates from a nationally representative sample,” Journal of General Internal Medicine 2000; 15 (Suppl. 1): 76 (abstract).
Funding for this project was provided by the Robert Wood Johnson Foundation, the Aetna Quality Care Research Fund, and Merck and Co., Inc.
Langa K, Kabeto M, Herzog AR, Chernew M, Ofstedal MB, Willis R, Wallace R, Mucha L, Straus W, Fendrick AM. “The quantity and cost of informal caregiving for the elderly with dementia: Estimates from a nationally representative sample,” Journal of General Internal Medicine 2000; 15 (Suppl. 1): 76 (abstract).
Funding for this project was provided by the Robert Wood Johnson Foundation, the Aetna Quality Care Research Fund, and Merck and Co., Inc.
5. Global Efforts to Study Economics of Ageing and Health
• Health and Retirement Study (HRS)
• English Longitudinal Study of Aging(ELSA)
• Survey on Health Aging and Retirement in Europe (SHARE)– Austria, Belgium, France, Denmark, Germany, Greece,
Italy, Netherlands, Spain, Sweden, Switzerland
• Mexican Health and Aging Study (MHAS)
What is the Value of Comparable Longitudinal Surveys in Many Nations?
• Each country can learn “what if” lessons from relationship between policies and outcomes experienced in other countries
• Argued at length in National Academy of Science, Preparing for an Aging World: The Case for Cross-National Research (2001)