The limited power of socioeconomic status to predict lifespan: Implications for pension policy

Baurin, Arno
(2021) The Journal of the Economics of Ageing — Vol. 20, p. 10039 (2021)

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  • Baurin, ArnoUCLouvain
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Abstract
Differences in life expectancy across socioeconomic status are well known and many economists argue that they should be taken into account when designing pension systems. This paper analyses the relevance of using socioeconomic characteristics to differentiate the retirement age. Using US mortality rates assembled by Chetty et al. (2016), we simulate the lifespan distribution both across and within socioeconomic categories. Then, we analyze these categories’ ability to predict the lifespan of individuals. Results suggest that socioeconomic status has a relatively limited predictive power, due to the huge lifespan heterogeneity “within” each of them.
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Baurin, A. (2021). The limited power of socioeconomic status to predict lifespan: Implications for pension policy. The Journal of the Economics of Ageing, 20, 10039. https://doi.org/10.1016/j.jeoa.2021.100339 (Original work published 2021)