Life cycle savings and consumption constraints

Recent tests of both the pure and the extended life cycle hypothesis have generated inconclusive results on the life cycle behavior of the elderly. We extend the life cycle model by introducing a constraint on the physical consumption opportunities of the elderly which, if binding, imposes a consumption trajectory declining in age. This explains much of the received evidence on the elderly's consumption and savings behavior, in particular declining consumption, and increasing savings and wealth with increasing age. Our analysis of German data gives additional support to our theory. We finally draw the implications of the theory on the incidence of consumption and income (wealth) taxes, and on the recent (inconclusive) tests of intergenerational altruism.Research in this paper was supported by the National Institute of Aging, Grant No 3 P01 AG 05842-01. The paper was read at the ISPE-Conference on Fiscal Implications of an Ageing Population, Vaalsbroek, The Netherlands, May/June 1990. We are grateful to the conference participants, and especially to Richard Bird, Maurice March and, Carol Popper, and Dave Wildasin for perceptive comments, and Ernst Seiler for able research assistance. Johannes Velling and two anonymous referees provided additional constructive critique.     

Some macroeconomic aspects of global population aging

Across the demographic transition, declining mortality followed by declining fertility produces decades of rising support ratios as child dependency falls. These improving support ratios raise per capita consumption, other things equal, but eventually deteriorate as the population ages. Population aging and the forces leading to it can produce not only frightening declines in support ratios but also very substantial increases in productivity and per capita income by raising investment in physical and human capital. Longer life, lower fertility, and population aging all raise the demand for wealth needed to provide for old-age consumption. This leads to increased capital per worker even as aggregate saving rates fall. However, capital per worker may not rise if the increased demand for wealth is satisfied by increased familial or public pension transfers to the elderly. Thus, institutions and policies matter for the consequences of population aging. The accumulation of human capital also varies across the transition. Lower fertility and mortality are associated with higher human capital investment per child, also raising labor productivity. Together, the positive changes due to human and physical capital accumulation will likely outweigh the problems of declining support ratios. We draw on estimates and analyses from the National Transfer Accounts project to illustrate and quantify these points.     

Disease prevalence,disease incidence,and mortality in the United States and in England

We find that both disease incidence and disease prevalence are higher among Americans in age groups 55–64 and 70–80, indicating that Americans suffer from higher past cumulative disease risk and experience higher immediate risk of new disease onset compared with the English. In contrast, age-specific mortality rates are similar in the two countries, with an even higher risk among the English after age 65. We also examine reasons for the large financial gradients in mortality in the two countries. Among 55- to 64-year-olds, we estimate similar health gradients in income and wealth in both countries, but for 70- to 80-year-olds, we find no income gradient in the United Kingdom. Standard behavioral risk factor’s (work, marriage, obesity, exercise, and smoking) almost fully explain income gradients among those aged 55–64 in both countries and a significant part among Americans 70–80 years old. The most likely explanation of the absence of an English income gradient relates to the English income benefit system: below the median, retirement benefits are largely flat and independent of past income, and hence past health, during the working years. Finally, we report evidence using a long panel of American respondents that their subsequent mortality is not related to large changes in wealth experienced during the prior 10-year period.     

Excluding Institutionalized Elderly from Surveys: Consequences for Income and Poverty Statistics

Growing life expectancy and changes in financial, marriage and labour markets have placed the income position of the elderly at the center of scientific and political discourse. As a consequence, the last decades witnessed the publication of various influential reports that contained comparative statistics on old age income inequalities on the basis of international surveys. Common to these surveys is that they exclude the elderly who live in institutions. The divergence between the target population (e.g. the population aged 65 and over) and the survey population (e.g. the noninstitutionalized population aged 65 and over) that thus arises, might lead to important bias in the survey results. However, hardly any research has been conducted quantifying the direction and strength of this bias. This article tries to fill this gap and assesses the consequences of excluding the institutionalized elderly for the validity and international comparability of a number of indicators. Analyses with the Belgian Datawarehouse Labour Market and Social Protection show that the resulting bias is negligible for average equivalent pension income, but that assistance dependency among pensioners is underestimated by 10%. Furthermore, on the basis of international statistics, it is shown that the share of elderly in institutions varies substantially across countries. It is argued how this jeopardizes the international comparability of old age statistics. Finally, the article opens up a discussion on the meaning of lack of income and wealth among institutionalized elderly. It concludes that depending on how this question is answered, poverty will be under- or overestimated in countries with a high share of institutionalized elderly.     

Overeducation,Skills and Wage Penalty: Evidence for Spain Using PIAAC Data

Despite well documented high levels of socioeconomic inequalities, health gradients by socioeconomic status (SES) in contemporary China have been reported to be limited. Using data from the 2010–2012 China Family Panel Studies, we reexamine associations between three sets of SES—human capital, material conditions, and political capital—and self-rated health among Chinese adults 18–70 years old, capitalizing on anchoring vignette data to adjust for reporting heterogeneity. We find strong evidence of substantial variations in reporting behaviors by education, cognition, and family wealth but not by family income or political capital. Failing to correct for reporting heterogeneity can bias the estimates of SES gradients in self-rated health as much as nearly 40 %. After vignette adjustment, we find significantly positive associations of education, family income, wealth, and political capital with self-rated health. Individuals’ cognitive capacity, however, does not predict self-rated health.     

遗产动机对中国老年家庭储蓄率的影响

中国人口老龄化问题日益凸显,老年家庭储蓄率居高不下,标准生命周期假说理论已无法解释。基于中国家庭金融调查数据,从遗产动机视角分析老年家庭高储蓄率现象。研究结果表明,中国老年家庭遗产动机显著提升家庭储蓄率,遗产动机使得老年家庭储蓄率水平显著提高5%—10%左右。进一步研究发现,相比较于城市家庭,遗产动机对农村家庭储蓄影响显著;相对于高等财富家庭而言,遗产动机显著促进中低财富家庭储蓄率水平,说明“未富先老”使得老年家庭有更强的遗产动机进行储蓄;对于家庭不同生活状况的子女,遗产动机显著提升子女体制外工作和子女教育水平低的老年家庭储蓄率,表明中国老年家庭利他主义的遗产动机较强。本文为理解中国老年家庭的高储蓄提供了新的视角,可以为政府相关部门制定政策提供参考。     

Poverty Is Low Consumption and Low Wealth,Not Just Low Income

The purpose of this paper is to suggest an improved measure of financial poverty, based on household consumption and wealth as well as income. Data come from the Household, Income and Labour Dynamics Australia (HILDA) Survey, which appears to be the first national socio-economic panel survey to provide longitudinal data on all three measures of household economic well-being. National measures of poverty in Australia and other Western countries are usually based only on low income. But this is conceptually incorrect; the measures lack validity. To be poor is to have a low material standard of living—involuntarily. So measures of poverty should also take account of household consumption and wealth. If a household has an adequate current level of consumption, it should not be classified as poor right now, even if its current income is low. Similarly, if it has substantial wealth (net worth), it should not be viewed as poor because it could draw down on wealth to boost current consumption. The invalidity of income-based measures has long been recognised in principle (Ringen 1987, The possibility of politics. Oxford: Clarendon Press). In practical terms, the problem is to combine measures of wealth and income, and especially consumption, in the same survey. In the 2005 HILDA Survey a battery of household expenditure items was included which, benchmarked against the Australian Bureau of Statistics’ Household Expenditure Survey for 2003–04, appeared to provide valid measurement of 53.4% of total household expenditure. These well measured items correlated 0.76 with total expenditure and, in combination with standard demographic variables, accounted for 78.3% of the variance in the total. This paper uses 2005–06 HILDA data to construct revised measures of financial poverty. The value of these measures for public policy and research purposes is illustrated. In particular, the new measures give much lower estimates of poverty than income-based measures. They can also be used to predict which households are at risk of future poverty.

Saving,Sharing, or Spending? The Wealth Consequences of Raising Children

This study uses 1986–2012 National Longitudinal Survey of Youth 1979 cohort data to investigate the relationship between raising children and net worth among younger Baby Boomer parents. I combine fixed-effects and unconditional quantile regression models to estimate changes in net worth associated with having children in different age groups across the wealth distribution. This allows me to test whether standard economic models for savings and consumption over the life course hold for families at different wealth levels. My findings show that the wealth effects of children vary throughout the distribution. Among families at or below the median, children of all ages were associated with wealth declines, likely due to the costs of child-rearing. However, at the 75th percentile and above, wealth increased with the presence of younger children but decreased after those children reached age 18. My results, therefore, provide evidence for a saving and investment model of child-rearing among wealthier families but not among families at or below median wealth levels. For these families, the costs of raising children largely outweighed motivations for saving.     

Poverty Among Elderly in India

Using consumption expenditure data of the National Sample Survey 2004?C2005, this paper estimates the size of elderly poor and tests the hypotheses that elderly households are not economically better-off compared to non-elderly households in India. Poverty estimates are derived under three scenarios??by applying the official cut-off point of the poverty line to household consumption expenditure (unadjusted), consumption expenditure adjusted to household size and consumption expenditure adjusted to household composition. Results show that an estimated 18?million elderly in India are living below the poverty line. On adjusting the consumption expenditure to household size and composition, there are no significant differences in the incidence of poverty among elderly and non-elderly households in India. This is in contrast to the notion that elderly households are better off than non-elderly households in India. Based on the findings, we suggest that the age dimension should be integrated into social policies for evidence based planning.     

预期寿命增长、年龄结构改变与我国国民储蓄率

人口年龄结构趋于老龄化和人均预期寿命逐步增长是目前我国人口发展的两个典型特征,而年龄阶段不同,个人的收入、消费与储蓄行为也不同。基于生命周期理论,在选定相关分析指标的基础上,文章使用我国省际平衡面板数据,实证分析了我国人口预期寿命增长和年龄结构改变对国民储蓄率的影响。分析结论表明,人口预期寿命增长提高了我国国民储蓄率;不考虑时间效应时,幼年人口负担比提高会减少国民储蓄率,而老年人口负担比提高会增加国民储蓄率;在考虑时间效应时,幼年人口负担比提高会增加国民储蓄率,而老年人口负担比提高会减少国民储蓄率。对此,文章给出了合理的解释。通过使用多种估计方法,我们发现所得到的结论是基本稳健的。     

老年人医疗保健支出水平及其影响因素分析——慢性病高发背景下的老年人医疗保健制度改革

选取年内绝对和相对医疗支出两个指标,采用Tobit模型,检验影响老年人医疗保健支出的因素。研究发现慢性病、收入、居住地、社会保障对老年人医疗保健支出的影响突出,其中慢性病的影响尤为显著,在此基础上提出调整城乡医疗资源配置结构,健全社会保障政策,在医疗保健制度中增加预防性保险与服务的政策性建议。     

The McMansionization of America? Income stratification and the standard of living in housing, 1960–2000

Consumption patterns and living standards are relatively neglected in stratification research even though they are important indicators of material well-being. Consumption inequality is related to income and wealth disparities through complex processes not yet well understood. This paper addresses this gap by analyzing a striking shift in the standard of living in housing in the US that occurred at the same time as a substantial increase in income inequality. Houses became significantly bigger in the 1980s and 1990s just as inequalities deepened, reversing an earlier trend towards smaller houses. Diverse theoretical traditions in the consumption and housing stratification literatures explain this shift differently, and in particular posit very different effects of rising income inequality. I derive several alternative expectations from these traditions: two predicting that the increasing size of houses was broadly shared across income levels, while another expects it represented increasing divergence in living standards, paralleling the trend in income inequality. I use US Census and American Housing Survey data and several different methods to adjudicate between these theories. The results provide some support for each of the alternative expectations, but the most significant finding is that big house ownership became more concentrated among the affluent. A focus on living standards thus uncovers a key source of rising disparities at the turn of the 21st century with important implications for wealth stratification too since houses are the major debt and asset held by most Americans.     

Is the Pro-Poor Premium Exemption Policy of Ghana’s NHIS Reducing Disparities Among the Elderly?

Under the act that established the National Health Insurance Scheme (NHIS), persons 70 years of age or above are automatically enrolled in the scheme and therefore can access health services free at the point of use. This suggests that the elderly who are unable to afford the premiums of private health insurance can enrol in the NHIS thereby eliminating the possibility of disparities in health insurance coverage. Notwithstanding, few studies have examined health insurance coverage among the elderly in Ghana. The lack of studies on the elderly in Ghana may be due to limited data on this important demographic group. Using data from the Study on Global Ageing and Health and applying logit models, this paper investigates whether the pro-poor exemption policy is eliminating disparities among the elderly aged 70 years and older. The results show that disparities in insurance coverage among the elderly are based on respondents’ socio-economic circumstances, mainly their wealth status. The study underscores the need for eliminating health access disparities among the elderly and suggests that the current premium exemptions alone may not be the solution to eliminating disparities in health insurance coverage among the elderly.     

Financial Satisfaction in Old Age: A Satisfaction Paradox or a Result of Accumulated Wealth?

Prior research consistently has found that older adults, despite low incomes, are more financially satisfied than younger adults. This “satisfaction paradox” is typically attributed to elders’ supposed psychological accommodation to poor financial circumstances. We advance a different explanation, one that focuses on substantial age differences in wealth and liabilities. Data are from the first wave of the Norwegian NorLAG study (n = 4,169). Findings support the hypothesis that an examination of a wider range of economic variables shows that material circumstances are more important to the financial satisfaction of the elderly than previously believed. A considerable part of the higher financial satisfaction with increasing age can thus be explained by greater assets and less debt among the aged. Nonetheless, assets and debt do not mediate this relationship at lower incomes, because older people with little income have very little accumulated wealth. As older people with little income and wealth have a much stronger tendency to be financially satisfied than their younger, equally poor counterparts, an “aging paradox” still remains in this field.     

Income Comparisons Among Neighbours and Satisfaction in East and West Germany

A series of studies have suggested that changes in others’ income may be perceived differently in post-transition and capitalist societies. This paper draws on the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population characteristics in very tightly drawn neighbourhoods to investigate whether reactions to changes in their neighbours’ income divide the German nation. We find that the neighbourhood income effect for West Germany is negative (which is in line with the ‘relative income’ hypothesis) and slightly more marked in neighbourhoods that may be assumed to be places where social interactions between neighbours take place. In contrast, the coefficients on neighbourhood income in East Germany are positive (which is consistent with the ‘signalling’ hypothesis), but statistically not significant. This suggests not only that there is a divide between East and West Germany, but also that neighbours may not be a relevant comparison group in societies that have comparatively low levels of neighbouring.     

高龄老人入住养老机构意愿的影响因素研究——以重庆市主城九区为例

高龄老人入住养老机构的意愿主要受个人特征、家庭特征和对养老机构认知等因素的影响,通过对重庆市主城九区实地调研,采用Logistic二元回归模型进行分析。结果表明居住地、年龄、家庭规模、家庭年净收入、设施完善程度、服务质量好坏等因素对高龄老人入住养老机构的意愿影响显著。在此基础上提出应重视农村地区机构养老模式发展、加快养老机构建设等建议。     

Demographic and economic correlates of health in old age

In this paper we examine disparities in the ability to function among older Americans. We place special emphasis on two goals: (I) understanding the quantitatively large socioeconomic status-health gradient, and (2) the persistence in health outcomes over long periods. We find that there exist strong contemporaneous and long-run feedbacks from health to economic status. In light of these feedbacks, it is important to distinguish among alternative sources of income and the recipient of income in the household. This research also demonstrates that health outcomes at old age are influenced by health attributes of past, concurrent, and future generations of relatives. Finally, we find that the demographic and economic differences that exist among them explain functional health disparities by race and ethnicity, but not by gender.     

人口老龄化、老年贫困与养老保障--基于德国的数据与经验

人口老龄化及老年女性比重较高增加了老年贫困的概率。对此,德国主要采取两项对策避免老年贫困：养老保障是第一道防线,里斯特／吕鲁普养老金、最低养老金等都是重要的政策选项;社会救助提供了最后一道有效安全网。借鉴德国经验,中国应通过完善多支柱模式并逐步扩大第二支柱比重、养老保险参量改革、建立老年低收入群体收入保护机制、建立健全老年社会救助制度等措施来有效解决人口老龄化过程中老年人特别是老年低收入群体的养老保障问题,有效规避老年贫困风险。     

Population dynamics and life-cycle consumption

This paper presents a model where aggregate consumption depends on both the level of wealth and the age structure of population. The explicit consideration of an endogenous rate of time preference permits to analyze the important role of population ageing as a determinant of aggregate saving. Received: 23 October 2001/Accepted: 13 February 2002 I would like to thank an anonymous referee for his comments. Financial support from CNR and MURST is gratefully acknowledged. Responsible editor: Alessandro Cigno.