Martin Salm

Subjective Mortality Expectations and Consumption and Saving Behaviours Among the Elderly

Life expectancy is an important factor that individuals have to take into account for saving and consumption choices. The life-cycle model of consumption and saving behaviour predicts that consumption growth should decrease with higher mortality rates. The aim of this study is to test this hypothesis based on data about subjective longevity expectations from the Health and Retirement Study merged with detailed consumption data from two waves of the Consumption and Activities Mail Survey. This study finds that an increase in subjective mortality by 1% corresponds to an annual decrease in consumption of non-durable goods of around 1.8%.

The Longevity Gap Between Black and White Men in the United States at the Beginning and End of the 20th Century

OBJECTIVES We sought to assess whether the disparity in mortality rates between Black and White men decreased from the beginning to the end of the 20th century. METHODS We used Cox proportional hazard models for mortality to estimate differences in longevity between Black and White Civil War veterans from 1900 to 1914 (using data from a pension program) and a later cohort of male participants (using data from the 1992 to 2006 Health and Retirement Study). In sensitivity analysis, we compared relative survival of veterans for alternative baseline years through 1914. RESULTS In our survival analysis, the Black-White male difference in mortality, both unadjusted and adjusted for other influences, did not decrease from the beginning to the end of the 20th century. A 17% difference in Black-White mortality remained for the later cohort even after we controlled for other influences. Although we could control for fewer other influences on longevity, the Black-White differences in mortality for the earlier cohort was 18%. CONCLUSIONS In spite of overall improvements in longevity, a major difference in Black-White male mortality persists.

The effect of pensions on longevity : Evidence from Union Army veterans

This study uses changes in pension laws for Union Army veterans as a natural experiment to estimate the causal effect of pensions on longevity, and to examine potential pathways underlying such a relationship. We examine the effects of the pension laws of 1907 and 1912, which granted old-age pensions to Union Army veterans. Life expectancy for veterans, who received such a pension, increased by 0.5 years and 2.7 years, respectively. The effect of veteran pensions on longevity was large across wealth groups and size of city. Pensions reduced mortality for both acute and non-acute causes of death.

The Role of Childhood Health for the Intergenerational Transmission of Human Capital: Evidence from Administrative Data

We use unique administrative German data to examine the role of childhood health for the intergenerational transmission of human capital. Specifically, we examine the extent to which a comprehensive list of health conditions – diagnosed by government physicians – can account for developmental gaps between the children of college educated parents and those of less educated parents. In total, health conditions explain 18% of the gap in cognitive ability and 65% of that in language ability, based on estimations with sibling fixed effects. Thus, policies aimed at reducing disparities in child achievement should also focus on improving the health of disadvantaged children.

Effects of Diagnosed Dementia on Medicare and Medicaid Program Costs

This study examines the impacts of physician-diagnosed Alzheimers disease and related dementias (ADRD) on Medicare and Medicaid program costs in 1994 and 1999. An innovative method is employed to estimate program payments over the life cycle starting at age 65. Using data from the 1994 and 1999 National Long-Term Care Surveys, merged Medicare claims, and national program data for Medicaid, we find that the share of total Medicare and Medicaid payments attributable to diagnosed ADRD was 5.46% in 1999. Total annual program payments attributable to ADRD decreased between 1994 and 1999, in contrast to an increase implied by a cross-sectional approach.

Child health disparities, socio-economic status, and school enrollment decisions: Evidence from German elementary school entrance exams

PURPOSE This chapter examines the role of child health for the intergenerational transmission of human capital. METHODOLOGY/APPROACH The chapter uses unique administrative data from German elementary school entrance examinations. The chapter considers child health conditions such as obesity, low birth weight, ear problems, eye problems, behavioral problems, asthma, and allergies. We control for socio-economic and demographic characteristics of children and their parents as well as for institutional factors such as duration of pre-school attendance. FINDINGS We find that health conditions are more common among children of less-educated parents. We also find that health conditions have a substantially negative impact on school readiness, and the negative impact is considerably stronger for children of less-educated parents. In total, 55% of the school readiness gap can be attributed to health factors. Specifically, 19% of the gap can be attributed to differences in the prevalence of health conditions, and 36% of the gap can be attributed to differences in the severity of the impact. Thus, policies aimed at reducing disparities in child achievement should also focus on improving the health of disadvantaged children. ORIGINALITY First, our study quantifies the extent to which the school readiness gap between parental education groups can be attributed to child health. Second, our data are of extraordinary quality, since they consist of a full sample of all children in one city and since they are collected during detailed examinations that were administered by government pediatricians.

Do Hospitals Respond to Increasing Prices by Supplying Fewer Services

Medical providers often have a significant influence on treatment decisions which they can use in their own financial interest. Classical models of supplier-induced demand predict that medical providers will supply fewer services if they face increasing prices. We test this prediction based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement – with increasing prices for some hospitals and decreasing prices for others – without affecting the relative prices for different types of patients. Based on administrative data, we find that hospitals do indeed react to increasing prices by reducing service supply.

Job loss does not cause ill health

I use longitudinal data from the Health and Retirement Study to estimate the effect of job loss on health for near elderly employees. Job loss is a major cause of economic insecurity for working age individuals, and can cause reduction in income, and loss of health insurance. To control for possible reverse causality, this study focuses on people who were laid off for an exogenous reason - the closure of their previous employers’ business. I find that the unemployed are in worse health than employees, and that health reasons are a common cause of job termination. In contrast, I find no causal effect of exogenous job loss on various measures of health. This suggests that the inferior health of the unemployed compared to the employed could be explained by reverse causality. I also use instrumental variable regression to estimate the effect of loss of health insurance, loss of income, and re-employment on health, and again find no statistically significant effects.

The Effect of Retirement on Healthcare Utilization: Evidence from China

We examine the effect of retirement on healthcare utilization in China using longitudinal data. We use a nonparametric fuzzy regression discontinuity design, exploiting the statutory retirement age in urban China as a source of exogenous variation in retirement. In contrast to previous results for developed countries, we find that in China retirement increases healthcare utilization. This increase can be attributed to deteriorating health and in particular to the reduced opportunity cost of time after retirement. For the sample as a whole, income is not a dominating mechanism. People with low education, however, are more likely to forego recommended inpatient care after retirement.