Individual Survival Curves Comparing Subjective and Observed Mortality Risks

41 Pages Posted: 6 Dec 2014

See all articles by Luc Bissonnette

Luc Bissonnette

Université Laval

Michael D. Hurd

RAND Corporation; State University of New York at Stony Brook - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)

Pierre-Carl Michaud

University of Quebec at Montreal (UQAM) - Department of Economics; Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPÉE); RAND Corporation, Labor and Population; IZA Institute of Labor Economics; Netspar

Abstract

In this paper, we compare individual survival curves constructed from objective (actual mortality) and elicited subjective information (probability of survival to a given target age). We develop a methodology to estimate jointly subjective and objective individual-survival curves accounting for rounding on subjective reports of perceived mortality risk. We make use of the long follow-up period in the Health and Retirement Study and the high quality of mortality data to estimate individual survival curves which feature both observed and unobserved heterogeneity. This allows us to compare objective and subjective estimates of remaining life expectancy for various groups, evaluate subjective expectations of joint survival and widowhood by household, and compare objective and subjective mortality with standard life-cycle models of consumption.

Keywords: subjective probabilities, old age mortality, joint survival of couples

JEL Classification: C81, D84, I10

Suggested Citation

Bissonnette, Luc and Hurd, Michael D. and Michaud, Pierre-Carl, Individual Survival Curves Comparing Subjective and Observed Mortality Risks. IZA Discussion Paper No. 8658, Available at SSRN: https://ssrn.com/abstract=2534686

Luc Bissonnette (Contact Author)

Université Laval ( email )

Université Laval, Pavillon J-A-DeSève, #2264
Québec, Quebec G1K 7P4 G1V0A6
Canada

Michael D. Hurd

RAND Corporation ( email )

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State University of New York at Stony Brook - College of Arts and Science - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Pierre-Carl Michaud

University of Quebec at Montreal (UQAM) - Department of Economics ( email )

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Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPÉE) ( email )

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RAND Corporation, Labor and Population ( email )

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United States

IZA Institute of Labor Economics ( email )

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Germany

Netspar ( email )

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