Discussant Comments for:
The Importance of Objective Health Measures in
Predicting Early Receipt of Social Security Benefits:
The Case of Fatness
Mark Duggan
Brookings Institution,
University of Maryland, and
National Bureau of Economic Research
August 10, 2006
Background
• Effect of health status on labor supply and/or OASDI claiming
– Lumsdaine and Mitchell (1999), Currie and Madrian (1999), and Bound,
Steinbricker, and Waidmann (2006)
• Persistent obstacles to reliable identification
– Self-reported health has many limitations
– Health status not exogenous – may be correlated with wage, etc.
• Thus a need for:
– “Better” health measures
– Plausibly exogenous source of variation in health status
Alternative measure of health – “fatness”
• Advantages over self-reported health status
– More objectively measured
– Continuous rather than discrete
• Large and growing fraction of U.S. residents is obese
– 14.4% of adults in 1976-80 vs. 30.5% by 1999-2000 (AOA, 2006)
• Obesity may influence the net utility of work
– Direct effect – work more difficult
– Indirect effect – health shocks (e.g. heart attack) more likely
• Could change optimal time to claim OASI retirement benefits
Measuring “Fatness”
• Most commonly used measure is BMI (w / h2)
• But large literature suggests other measures are superior
– Percent body fat (PBF), total body fat (TBF), etc.
– BMI measure understates % obese and has substantial Type I,II error
• But these superior measures cannot be calculated in PSID, etc.
– Thus cannot relate PBF, TBF, etc. to labor supply
• Approach used by the authors:
– Use NHANES III data to estimate TBF = f(Age, Weight, Height)
– Take this equation to PSID to estimate TBF
Does Fatness Influence OASI Claiming?
• Parameter of interest is b in following (simplified) equation
SSj = Fjb + Xjd + uj
with SSj equal to one if j claims OASI at age of 62
• Problem – Fj not exogenous
– Thus b does not necessarily capture a causal effect
• Authors’ strategy for dealing with this problem
– Instrument for Fj with the fatness of the respondent’s adult child
– Correlation likely to be (at least partially) driven by genetic factors
– Assumes fatness of child uncorrelated with other causes of claiming
Results
• Measure used influences % considered to be obese
– 23% (with BMI) vs. 70% (PBF) of women and 19% vs. 43% of men
• Also changes black-white obesity gap
– Narrows difference for women
– White men significantly more obese with PBF, no difference with BMI
• Fatness significantly positively correlated with early OASI claiming
– Qualitatively similar estimates using BMI and PBF measures
– IV estimates imprecisely estimated – “benefit not worth the cost”
Possible Next Steps
• What is the mechanism?
– Does obesity makes work more difficult and hasten LF exit?
– Is there some other driving factor that is correlated with obesity?
– Are individuals claiming so as to maximize present value of benefits?
Present Value of OASI Retirement Benefits
Mortality Rate
Claiming Age
Avg
2 * Avg
0.5 * Avg
62
$169,886
$131,246
$192,520
63
$170,791
$128,930
$195,310
64
$170,278
$125,404
$196,615
65
$168,472
$120,831
$196,543
Assumes average PIA for men in 2004 of $1274.30.
Possible Next Steps (cont.)
• Can rise in obesity partially explain growth in SSDI / SSI enrollment?
– From 3.2 percent of non-elderly adults in 1985 to 5.9 percent in 2005
– Currently this group is excluded from analysis
• Fraction claiming OASI relatively stable over same period
– 55 percent of men and 60 percent of women claimed at 62 in 2004
– Similar to corresponding rates of 54 and 59 percent in 1985
– What other factors are offsetting effect of obesity on early claiming
(which should be rising given results here)?
• Further probing on identification strategy given endogeneity of Fj
Figure 1. SSDI Recipiency Rates for Adults Ages 25 - 64, 1957 - 2005
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
Source: Social Security Bulletin: Annual Statistical
Supplement (various years)