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The Association Between Individual Income and Remaining Life Expectancy at the Age of 65 in the Netherlands

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Demography

Abstract

This article quantifies the association between individual income and remaining life expectancy at the statutory retirement age (65) in the Netherlands. For this purpose, we estimate a mortality risk model using a large administrative data set that covers the 1996–2007 period. Besides age and marital status, the model includes as covariates individual and spouse’s income as well as a random individual specific effect. It thus allows for dynamic selection based on both observed and unobserved characteristics. We find that conditional on marital status, individual income is about equally strong and negatively associated with mortality risk for men and women and that spouse’s income is only weakly associated with mortality risk for women. For both men and women, we quantify remaining life expectancy at age 65 for low-income individuals as approximately 2.5 years less than that for high-income individuals.

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Notes

  1. See Duleep (1986) for the United States, Martikainen et al. (2001) for Finland, Osler et al. (2002) for Denmark, Attanasio and Emmerson (2003) for the UK (using household wealth), Blakely et al. (2004) for New Zealand, and von Gaudecker and Scholz (2007) for Germany.

  2. For a discussion on the implications for public health policy, we refer to epidemiological studies, such as Huisman et al. (2005) and the references therein.

  3. In the Grossman (1972, 2000) model, health deteriorates with age at a relatively slower rate for individuals with a higher socioeconomic position, which, in his model, implies that an individual’s socioeconomic position is positively related to both (lifetime) income and life expectancy.

  4. Because of immigration, 532 individuals were older than 65 when they entered the panel after 1996. Estimating the model using only the 58.5 % of individuals who entered the panel in 1996 does not affect the main conclusions of this article.

  5. About 8 % of the households have other household members, mostly children. Excluding these households would not affect our main results, which also remain unaffected by the use of a standardized (equivalized) income concept or pension income only.

  6. Following Statistics Netherlands guidelines, we do not report statistics based on a number of observations below 25. These statistics are designated in the tables by dashes.

  7. In our sample, about 25 % of married women age 65–69 receive an occupational pension; for women age 70–74, this figure is about 20 %, and for women age 75 or older, it is about 16 %.

  8. See the Appendix: the p values corresponding to a likelihood ratio test of Model 2 against Model 1 in Table 7 and of Model 7 against Model 6 in Table 8 are .33 and .18, respectively.

  9. We refer to our working paper, Kalwij et al. (2009), for the technical details.

  10. The estimates of unconditional remaining life expectancy at age 65 are 15.99 (0.49) for men and 18.41 (0.38) for women. For these calculations, we estimated the mortality risk model using only age and year dummy variables as covariates.

  11. An individual with low life expectancy prefers to retire earlier than an individual with high life expectancy, ceteris paribus (Bloom et al. 2003).

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Acknowledgments

Financial support from Stichting Instituut GAK (through Netspar) is gratefully acknowledged. We wish to thank Margherita Borella, Koen Caminada, Katherine Carman, Stefan Hochguertel, Arie Kapteyn, Pierre Carl Michaud, seminar participants at the Utrecht School of Economics, the Center for Research on Pensions and Welfare policies in Turin (CeRP’s 10th anniversary conference), University of Padova, the Netspar workshop “Labour Force Participation and Well-being of the 50+ Population” (September 2009), the European Society for Population Economics Conference 2010, the Econometric Society World Congress 2010, and two anonymous referees for valuable comments and discussions.

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Authors and Affiliations

  1. Utrecht University School of Economics, PO Box 80125, 3508 TC, Utrecht, the Netherlands

    Adriaan S. Kalwij

  2. Network for Studies on Pensions, Aging and Retirement (Netspar), Tilburg University, Tilburg, the Netherlands

    Adriaan S. Kalwij

  3. Network for Studies on Pensions, Aging and Retirement (Netspar), University of Groningen, Groningen, the Netherlands

    Rob J. M. Alessie

  4. Network for Studies on Pensions, Aging and Retirement (Netspar), Leiden University, Leiden, the Netherlands

    Marike G. Knoef

  5. CentERdata, Tilburg, the Netherlands

    Marike G. Knoef

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  1. Adriaan S. Kalwij
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  2. Rob J. M. Alessie
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Correspondence to Adriaan S. Kalwij.

Appendix

Appendix

Table 7 Estimation results for men
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Table 8 Estimation results for women
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Table 9 Income during retirement (yearly amounts in 2005): Different household types in the baseline
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Kalwij, A.S., Alessie, R.J.M. & Knoef, M.G. The Association Between Individual Income and Remaining Life Expectancy at the Age of 65 in the Netherlands. Demography 50, 181–206 (2013). https://doi.org/10.1007/s13524-012-0139-3

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