Unobserved Heterogeneity Can Confound the Effect of Education on Mortality

Two opposing hypotheses were proposed to explain the life course pattern in the effect of education on mortality: “cumulative advantage,” where the education effect becomes stronger with age, and “age-as-leveler,” where the effect becomes weaker in old age. Most empirical studies bring evidence for the latter hypothesis, but the observed convergence of mortality patterns could be an artifact of selective mortality due to unobserved heterogeneity. A simulation shows that unobserved heterogeneity can bias the estimated effect of education downward so that the cohort-average effect of education decreases in old age regardless of the shape of the underlying subject-specific trajectory.