Ryan D. Edwards

Health Risk and Portfolio Choice

This article investigates the role of self-perceived risky health in explaining continued reductions in financial risk taking after retirement. If future adverse health shocks threaten to increase the marginal utility of consumption, either by absorbing wealth or by changing the utility function, then health risk should prompt individuals to lower their exposure to financial risk. I examine individual-level data from the Study of Assets and Health Dynamics Among the Oldest Old (AHEAD), which reveal that risky health prompts safer investment. Elderly singles respond the most to health risk, consistent with a negative cross partial deriving from health shocks that impede home production. Spouses and planned bequests provide some degree of hedging. Risky health may explain 20%% of the age-related decline in financial risk taking after retirement.

The Pervasive Role of Rank in the Health of U.S. Veterans

The following article tests the hypothesis that veterans have better health if they were officers when they were in the U.S. military than if they served in the enlisted ranks. It examines this hypothesis by presenting results from logistic regressions that are based on four surveys: the National Survey of Veterans, the Survey of Retired Military, the Panel Study of Income Dynamics, and the Wisconsin Longitudinal Study. In all four of these surveys, the evidence is consistent with the hypothesis that military rank is associated with health, particularly among veterans who served longer. It also suggests that the health gradient by rank is independent of similar gradients by education and income as well as health differences by race. These findings indicate that health may be influenced not just by differences in civilian society but also by those in the military.

Negative Effects of Paternal Age on Children's Neurocognitive Outcomes Can Be Explained by Maternal Education and Number of Siblings

Background Recent findings suggest advanced paternal age may be associated with impaired child outcomes, in particular, neurocognitive skills. Such patterns are worrisome given relatively universal trends in advanced countries toward delayed nuptiality and fertility. But nature and nurture are both important for child outcomes, and it is important to control for both when drawing inferences about either pathway. Methods and Findings We examined cross-sectional patterns in six developmental outcome measures among children in the U.S. Collaborative Perinatal Project (n = 31,346). Many of these outcomes at 8 mo, 4 y, and 7 y of age (Bayley scales, Stanford Binet Intelligence Scale, Graham-Ernhart Block Sort Test, Wechsler Intelligence Scale for Children, Wide Range Achievement Test) are negatively correlated with paternal age when important family characteristics such as maternal education and number of siblings are not included as covariates. But controlling for family characteristics in general and mothers education in particular renders the effect of paternal age statistically insignificant for most developmental measures. Conclusions Assortative mating produces interesting relationships between maternal and paternal characteristics that can inject spurious correlation into observational studies via omitted variable bias. Controlling for both nature and nurture reveals little residual evidence of a link between child neurocognitive outcomes and paternal age in these data. Results suggest that benefits associated with the upward trend in maternal education may offset any negative effects of advancing paternal age.

Commentary: Soda Taxes, Obesity, and the Shifty Behavior of Consumers

Rising obesity is a threat to public health, and taxing sugar-sweetened beverages (SSBs) in order to reduce consumption and thus caloric intake could be a viable policy response. But raising the price of SSB calories will raise the quantity demanded of relatively cheaper calories, and net effect on obesity is unclear. I review the evidence on shifting calorie demand and discuss the viability of soda taxes to achieve improvements in public health.

Spinning the wheels and rolling the dice: life-cycle risks and benefits of bicycle commuting in the U.S.

OBJECTIVE To assess the net impact on U.S. longevity of the decision to commute by bicycle rather than automobile. METHODS We construct fatality rates per distance traveled using official statistics and denominators from the 2009 National Household Travel Survey. We model the life-table impact of switching from auto to bicycle commuting. Key factors are increased risks from road accidents and reduced risks from enhanced cardiovascular health. RESULTS Bicycling fatality rates in the U.S. are an order of magnitude higher than in Western Europe. Risks punish both young and old, while the health benefits guard against causes of mortality that rise rapidly with age. Although the protective effects of bicycling appear significant, it may be optimal to wait until later ages to initiate regular bicycle commuting in the current U.S. risk environment, especially if individuals discount future life years. CONCLUSIONS The lifetime health benefits of bicycle commuting appear to outweigh the risks in the U.S., but individuals who sufficiently discount or disbelieve the health benefits may delay or avoid bicycling. Bicycling in middle age avoids much fatality risk while capturing health benefits. Significant cross-state variations in bicycling mortality suggest that improvements in the built environment might spur changes in transit mode.

The Cost of Cyclical Mortality

Sustained growth in both incomes and life spans are the hallmarks of modern development. Fluctuations around trend in the former, or business cycles, have been a traditional focus in macroeconomics, while similar cyclical patterns in mortality are also interesting and are now increasingly studied. In this paper, I assess the welfare implications of cyclical fluctuations in mortality using a new utility-theoretic model of preferences over uncertain length of life. Echoing the classic result of Lucas (1987) regarding business cycles, my findings suggest that short-term fluctuations in mortality are not very costly. While consumption fluctuations are relatively large, cyclical fluctuations in mortality are tiny compared to the much larger static uncertainty in length of life that derives from naturally rising mortality rates through age. Secular improvements in life expectancy and gains against static health inequalities appear to be much more important than cyclical mortality.

Health, SES, and the timing of education among military retirees

The timing of education across the life cycle is differentially associated with older age health outcomes and socioeconomic status among military retirees, a subpopulation with common levels of adolescent health, but variation in educational timing. A year of education obtained before military service lowers the probability of poor health in retirement by 2.5 percentage points, while a year obtained after service reduces poor health by only 0.6 percentage point. By contrast, education raises income and wealth uniformly through vintage. This suggests that education improves health through fostering the lifelong accumulation of healthy behaviors and habits rather than raising income or wealth.

Widening Health Inequalities Among U.S. Military Retirees Since 1974

I explore trends in mortality among U.S. military retirees using a new dataset of payroll records that include pay grade. Trends in mortality by pay grade reveal that health inequalities steadily widened between 1974 and 2004. Additive differentials in mortality rates remained stable, but since mortality declined exponentially, by a factor of about one third, proportional differentials in mortality and thus additive differentials in life expectancy have widened. The advantage in life expectancy enjoyed by retired officers grew roughly from 3 to 4 years. The sources of these trends remain unclear and are beyond the ability of the data to inform, but the results bear implications for trends in inequality and for policy.

Uncertain Demographic Futures and Government Budgets in the US

Recent decades have seen the emergence of massive public sector transfer programmes in industrial nations. Because many transfers are age related, the population age distribution is a powerful influence on government budgets, and ageing will be very costly. We construct stochastic projections of the budgets for the federal and state/local governments, disaggregated by programme. These are driven by stochastic population projections and by stochastic projections of productivity growth and real interest rates. The demography influences budgetary outcomes through the age specificity of seven categories of tax payment and 28 government spending programmes, as well as through public goods expenditures, debt service and provision of congestible services. Forecasts of government deficits and debt under current tax and benefit trajectories make it clear that adjustments will have to be made in the future to avoid implausibly high and unsustainable debt levels. Subsequent forecasts are conditional on an upper bound to the federal debt/GDP ratio of 0.80. There is a very slight chance (2.5%) that the overall tax burden will barely rise, but most likely it will have to increase by 62% (from 24% in 1994 to 38% of GDP in 2070), and there is a slight chance that taxes would rise by 120% (to 53%). We have not yet explored adjustment through reduction of benefits. The expected GDP shares of child related expenditures and age neutral expenditures are both flat up to 2070. The expected share of old age expenditures, however, rises from 8.5% of GDP in 1994 to 22.5% in 2070. We find that there is a strong negative correlation between rates of expenditure on child-oriented programmes and on elder-oriented programmes, as one would expect given the importance of fertility for both outcomes. Thus, focusing exclusively on the tax burden resulting from population ageing could somewhat exaggerate the increases needed in the future. We also find that the rising cost of Social Security benefits (OASDI) accounts for only 28% of the rise in old age expenditures; fixing Social Security will not in itself fix the federal budget. The rising costs of health care will contribute even more and must be addressed as well.

Key Equations in the Tuljapurkar-Lee Model of the Social Security System

We present stochastic forecasts of the Social Security trust fund by modeling key demographic and economic variables as historical time series, and using the fitted models to generate computer simulations of future fund performance. We evaluate several plans for achieving long-term solvency by raising the normal retirement age (NRA), increasing taxes, or investing some portion of the fund in the stock market. Stochastic population trajectories by age and sex are generated using the Lee-Carter and Lee- Tuljapurkar mortality and fertility models. Interest rates, wage growth and equities returns are modeled as vector autoregressive processes. With the exception of mortality, central tendencies are constrained to the Intermediate assumptions of the 2002 Trustees Report. Combining population forecasts with forecasted per-capita tax and benefit profiles by age and sex, we obtain inflows to and outflows from the fund over time, resulting in stochastic fund trajectories and distributions. Under current legislation, we estimate the chance of insolvency by 2038 to be 50%, although the expected fund balance stays positive until 2041. An immediate 2% increase in the payroll tax rate from 12.4% to 14.4% sustains a positive expected fund balance until 2078, with a 50% chance of solvency through 2064. Investing 60% of the fund in the S&P 500 by 2015 keeps the expected fund balance positive until 2060, with a 50% chance of solvency through 2042. An increase in the NRA to age 69 by 2024 keeps the expected fund balance positive until 2047, with a 50% chance of solvency through 2041. A combination of raising the payroll tax to 13.4%, increasing the NRA to 69 by 2024, and investing 25% of the fund in equities by 2015 keeps the expected fund balance positive past 2101 with a 50% chance of solvency through 2077.