Subjective survival expectations and observed survival: How consistent are they?

Abstract

In this paper, we use new models to convert subjective expectations elicited from individual responses into conditional survival functions. We also estimate the effects of individual characteristics and assess the impact of health shocks on individual updates of subjective expectations. We use Health and Retirement Study (HRS) data from 1992 to 2006. By and large, our results confirm past empirical findings, but also identify patterns not documented in previous research. We show that the subjective probabilities are remarkably close to the results of actual life tables constructed from observed data, that whites underestimate their survival chances more than blacks, that women underestimate their survival chances more than men, and that the subjective underestimation of conditional survival increases with age in all population subgroups. We find significant differences in the survival outlooks of the original HRS cohort and a more recent HRS cohort (1992 versus 2004). These differences persist after introducing suitable controls. The observed mortality differentials between smokers and non-smokers, obese and non-obese individuals, and high-education and low-education groups are quite close to those of these subgroups' subjective survival expectations. Finally, we find large updating effects that result from recent health shocks on subjective expectations.

A unifying framework for the study of population aging

“…This has been done in Aktas and Sanderson (2015), in which estimates from anticipated life tables were transformed into anticipatory ages. Palloni and Novak (2017) showed that subjective life tables and observed life tables are consistent with each other.…”

Financial Regret at Older Ages and Longevity Awareness

“…The latter is consistent with past literature showing that African-Americans in the US tend to overestimate their survival chances in later life (e.g., RoebuckBulanda et al 2009;Hurd & McGarry 1995;Irby-Shasanmi 2013;Mirowsky 1999;Palloni & Novak 2016;and Hurwitz et al 2022b). 10 E.g., Pieters 2004, 2007;Muermann et al 2006;and George & Dane 2016. …”

“…See for instance RoebuckBulanda et al 2009;Hurd & McGarry 1995;Irby-Shasanmi 2013;Mirowsky 1999;Palloni &Novak 2016: andHurwitz et al 2022b. …”

Biased Survival Expectations and Behaviours: Does Domain Specific Information Matter?

“…Rational expectations models (e.g., rational addiction models) are grounded on the assumption that individuals accurately form their survival expectations (Yaari, 1965). Consistently, some research has documented that subjective survival expectations are on average consistent with life table probabilities (Hurd & McGarry, 1995;Hurd & McGarry, 2002;Palloni & Novak, 2016). However, more recent studies show that aggregate life table realizations do not account for individual-specific heterogeneity (Gan et al, 2004).…”

“…2 Some datasets, such as the Health and Retirement Survey (HRS) in the United States and the Survey of Health Ageing and Retirement in Europe (SHARE) contain a specific module with an end-of-life panel component which exhibits to date a reasonable sample and response rate. Some studies have already documented evidence of an age specific distribution of subjective and objective survival in the United States (Bissonnette et al, 2017;Palloni & Novak, 2016). 3 Alternatively, behavioural biases such as longevity optimism, or the individual specific tendency to view the future more in one's favour, can underpin individuals' differences in survival expectations.…”