Friedrich Breyer

Fairness of Public Pensions and Old-Age Poverty

In several OECD countries, public pay-as-you-go financed pension systems have undergone major reforms in which future retirement benefit promises have been scaled down. A consequence of these reforms is that especially in countries with a tight tax-benefit linkage, the retirement benefit claims of low-income workers might not even exceed the minimum income guarantee which the government provides the aged. Recently, some German politicians have criticized this likely development because it was unjust that persons who have paid contributions over a long working life end up with no higher benefits than people who have never worked or paid any contributions. However, the government defended the current retirement benefit formula with the argument that every Euro paid as contributions had exactly the same value in generating future retirement benefits. But this logic has been questioned recently, e.g. by Breyer and Hupfeld (2009), since the value of a contributed Euro depends on the life expectancy of the individual, which is positively correlated with annual income. In that earlier paper, we introduced the concept of distributive neutrality, which takes income-group-specific differences in life expectancy into account. The present paper estimates the relationship between annual earnings and life expectancy of German retirees empirically and shows how the formula that links benefits to contributions would have to be modified to achieve distributive neutrality. We compare the new formula to the benefit formulas in other OECD countries and analyze a data set provided by the German Pension Insurance Office on a large cohort of pensioners to find out how the old-age poverty rate would be affected by the proposed change of the benefit formula. Finally, we discuss other possible effects of a change in the benefit formula, especially on the labour supply of different earnings groups.

How You Ask is What You Get: Willingness-to-Pay for a QALY in Germany

We report results of a survey of a representative sample of the German population in which respondents were asked in various scenarios for their willingness-to-pay (WTP) for a gain of one quality-adjusted life year. While one version of the survey exactly copied the setting (online survey) and the questionnaire used in the EuroVaQ project, in the second version the hypothetical nature of the questions was emphasized more strongly, and the survey was conducted as a computer-assisted personal interview. The results show that the average and median WTP responses differed between scenarios but, overall, became considerably larger in the second version.

Income and longevity revisited: do high-earning women live longer?

The empirical relationship between income and longevity has been addressed by a large number of studies, but most were confined to men. For the first time we analyze a large data set from the German public pension scheme on women who died between 1994 and 2005, employing both non-parametric and parametric methods. We find that the relationship between earnings and life expectancy is similar for women and men: Among women who contributed at least for 25 years, women at the 90th percentile of the income distribution can expect to live 3 years longer than women at the 10th percentile.

Is There a Dead-Anyway Effect in Willingness to Pay for Risk Reduction?

In einem neueren Beitrag diskutieren Pratt and Zeckhauser (JPE, 1996), welches Mas der marginalen Zahlungsbereitschaft (WTP) von Individuen fur die Reduktion ihrer Sterbewahrscheinlichkeit bei offentlichen Entscheidungen uber gefahrenerhebliche Projekte verwendet werden sollte. Sie schlagen vor, die gemessene WTP um den so genannten Dead-anyway-Effekt zu berichtigen, der besagt, dass die WTP mit dem Ausgangswert des Risikos zunimmt, dem das befragte Individuum ausgesetzt ist. Dieser Effekt beruht allerdings auf der Abwesenheit vollkommener Markte fur bedingte Guter. Wir diskutieren zunachst die theoretischen Grundlagen des Dead-anyway-Effekts und schlagen dann einen neuen empirischen Test mittels der Beziehung zwischen Vermogen, Sterberisiko und Lebenszufriedenheit vor. Eine Anwendung des Tests an Hand zweier Satze von Umfragedaten aus Deutschland und Australien ergibt keine Bestatigung fur den von Pratt und Zeckhauser behaupteten Effekt. In a recent paper, Pratt and Zeckhauser (JPE, 1996) discuss the measure of individuals willingness to pay (WTP) for the reduction of risks to their lives which should be used for public decisions on risk-reducing projects. They suggest to correct observed WTP for the dead-anyway effect, which says that WTP increases with the level of risk to which the individual is exposed - an effect which is due to the imperfection of contingent-claims markets. We first discuss the theoretical foundations of the asserted effect and then propose a new empirical test based on the relationship between wealth, life satisfaction and exposure to risk of dying. Application of the test using two sets of survey data from Germany and Australia.yields no support for the asserted dead-anyway effect.

Wirtschaftliche Aspekte der Märkte für Gesundheitsdienstleistungen

Märkte für Gesundheitsdienstleistungen zeichnen sich nicht nur dadurch aus, dass auf ihnen sehr heterogene und komplexe Humandienstleistungen und andere Güter gehandelt werden, sondern auch dadurch, dass sie in ihrer Finanzierung zweigeteilt sind und sich letztlich aus vielen Teilmärkten zusammensetzen. In einem Gutachten des DIW Berlin (Deutschen Instituts für Wirtschaftsforschung) unter Mitarbeit von IGES Berlin für das Bundesministerium für Wirtschaft und Technologie war es ein zentrales Anliegen, die vielfältigen Märkte des Gesundheitsbereichs zu identifizieren, ihre Entwicklung und Veränderung in der Vergangenheit zu beleuchten und entsprechende Entwicklungen in der Zukunft zu prognostizieren. Dies galt es im Besonderen unter sich verändernden demographischen und wettbewerblichen Bedingungen in der EU zu tun. Das Augenmerk war dabei vor allem auf der Frage der Finanzierung in der Vergangenheit und den Potenzialen in der Zukunft gerichtet.

Long-Term Effects of Diabetes Prevention: Evaluation of the M.O.B.I.L.I.S. Program for Obese Persons

In response to the growing burden of obesity, public primary prevention programs against obesity have been widely recommended. Several studies estimated the cost effects of diabetes prevention trials for different countries and found that diabetes prevention can be costeffective. Nevertheless, it is still controversial if prevention conducted in more real-world settings and among people with increased risk but not yet exhibiting Increased Glucose Tolerance can really be a cost-effective strategy to cope with the obesity epidemic. We examine this question in a simulation model based on the results of the M.O.B.I.L.I.S program, a German lifestyle intervention to reduce obesity, which is directed on the high-risk group of people who are already obese. The contribution of this paper is the use of 4-year follow-up data on the intervention group and a comparison with a control group formed by SOEP respondents as inputs in a Markov model of the long-term benefits of this intervention due to prevention of type-2 diabetes.