Social Security income and recipient death rates
David Francis reports on research suggesting that retirees with lower income from social security - other factors held constant - tend to have lower mortality rates.
Francis is summarizing research by Stephen Snyder and William Evans. Evans and Snyder exploited a natural experiment that made it possible to check the connection between social security income and mortality rates in Lower Social Security Benefits Reduced Mortality:
- "In The Impact of Income on Mortality: Evidence From the Social Security Notch (NBER Working Paper No. 9197), Stephen Snyder and William Evans explore a way to get around this puzzle. They compare the mortality rates of two groups of elderly males affected by a major change in the Social Security laws which arbitrarily trimmed the pensions of later retirees compared to those before them...
Concerned with rapidly rising costs, the federal government changed the way that benefits were calculated for new beneficiaries in 1977. This substantially decreased the size of payments for recipients born after January 1, 1917. As a result of these changes, two people with identical earnings histories but different birth dates would receive substantially different retirement incomes. Those born after what is called the "Notch" had little time to adjust since the changes happened late in their work lives. Most did not even realize the impact of the law's changes on payments until after they retired.
Snyder and Evans compare the five-year mortality rates after age 65 for those born in the fourth quarter of 1916, just before the Notch, with those born in the first quarter of 1917..."
- "To the surprise of the authors, they find that those younger retirees with smaller Social Security benefits had a lower mortality rate than retirees with more generous benefits. Since there is little difference between the cohorts except their Social Security income, the authors attribute this difference to the lower incomes generated by the "Notch." The authors test this counterintuitive result by examining the mortality rates for women from the same cohorts. Most women from these birth cohorts receive Social Security benefits as a result of their husbands' contributions to the system, and there is little difference in Social Security earnings across these groups. Therefore, there should be no difference in mortality across these groups, which is exactly what the authors find."
- "...Snyder and Evans find that smoking patterns do not explain the higher mortality rate for the higher-income retirees. The younger cohort, those born after the Notch, responded to lower incomes by increasing the amount of their post-retirement work by 5 percentage points more than those born earlier; there was a large increase in work after age 67. Some probably returned as part-time workers, often in different industries, sometimes at reduced wages from their primary career employment. "This work could have positive health benefits if the work keeps the seniors connected to the community and reduces social isolation," the authors speculate."