2017 Fiscal Year Research-status Report
Wealth-Health Inequality at Retirement: an Implication for a Social Security Reform
| Project/Area Number |
15K03505
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| Research Institution | National Graduate Institute for Policy Studies |
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Principal Investigator |
Porapakkarm P. 政策研究大学院大学, 政策研究科, 准教授 (10751266)
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| Project Period (FY) |
2015-04-01 – 2019-03-31
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| Keywords | health shock / wealth-health gradient / life-cycle model / costs of bad health |
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| Outline of Annual Research Achievements |
Our final paper from the project is titled “The Lifetime Cost of Bad Health”. Our first novel finding is that not only is the direct causality between bad health and economic outcomes, e.g. earning loss and high medical expense due to bad health, important to explain health-induced inequality, taking into account the composition difference between the health and the unhealthy is also as equally as important. For example, the earning loss and high medical expenses can explain only 40% of the difference in accumulated median wealth between the healthy and the unhealthy near the retirement ages (60-64 years old). The remaining 60% is due to the larger proportion of the unhealthy having a low marginal propensity to save. Second we use our estimated life cycle model to examine the pecuniary and non-pecuniary costs of health shocks. Specifically, the pecuniary cost is earning losses and medical losses while the non-pecuniary cost is the shorter life expectancy due to the lower survival probability if being unhealthy. We find that the lifetime pecuniary costs of bad health are highly concentrated, with the largest component of these costs being the loss in labor earnings. In addition, the non-pecuniary costs of bad health are very important along two dimensions. i) individuals value good health mostly because it extends life expectancy. ii) health uncertainty substantially increases lifetime inequality once taking into account that unhealthy people have a shorter lifespan.
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| Current Status of Research Progress |
Current Status of Research Progress
2: Research has progressed on the whole more than it was originally planned.
Reason
The findings from the project are reported in two academic publications. The first one is titled “Medical Spending in the US: Facts from the Medical Expenditure Panel Survey Dataset” and published in Fiscal Studies Journal (2016). The second paper is titled “The Lifetime cost of bad health” and currently published as NBER Working Paper (2017). I and the two research collaborators are now revising the latter paper and will submit to an international peer-reviewed academic journal in Fiscal year 2018.
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| Strategy for Future Research Activity |
I and my research collaborators are now revising on the final paper of the project titled “The Lifetime Costs of Bad Health”. The early version of the paper was published as NBER Working Paper in 2017. The final paper is expected to submit to a peer-reviewed journal by the end of Fiscal Year 2018. I also scheduled to present the final results at Society for The Advancement of Economic Theory (Taiwan) in this July.
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| Causes of Carryover |
In Fiscal year 2017, I have a budget left to carry over to Fiscal year 2018. The final paper of the project is under a revision and will be submitted to a journal for publication in Fiscal year 2018. So the unused fund will be used to cover the project member’s research meeting trips.
1)In Fiscal year 2018, I plan to use the carry over funds to support research meeting trips with my collaborators. This includes one or two conference trips to present our final findings.
2)A part of the funds will be allocated to purchase consumables, such as printing toner, and to update some computer peripherals and software, such as computer monitor, hard drive, Intel Fortran, Stata.
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