Adjusting Government Policies for Age Inflation

30 Pages Posted: 18 Aug 2008 Last revised: 29 Jan 2010

See all articles by John B. Shoven

John B. Shoven

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Gopi Shah Goda

Stanford University

Date Written: August 2008

Abstract

Government policies that are based on age do not adjust to the fact that a given age is associated with a higher remaining life expectancy and lower mortality risk relative to earlier time periods due to improvements in mortality. We examine four possible methods for adjusting the eligibility ages for Social Security, Medicare, and Individual Retirement Accounts to determine what eligibility ages would be today and in 2050 if adjustments for mortality improvement were taken into account. We find that historical adjustment of eligibility ages for age inflation would have increased ages of eligibility by approximately 0.15 years annually. Failure to adjust for mortality improvement implies the percent of the population eligible to receive full Social Security benefits and Medicare will increase substantially relative to the share eligible under a policy of age adjustment.

Suggested Citation

Shoven, John B. and Goda, Gopi Shah, Adjusting Government Policies for Age Inflation (August 2008). NBER Working Paper No. w14231. Available at SSRN: https://ssrn.com/abstract=1230855

John B. Shoven (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
650-326-5377 (Phone)
650-328-4163 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Gopi Shah Goda

Stanford University ( email )

SIEPR
366 Galvez St.
Stanford, CA 94305
United States
6507360480 (Phone)

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