The 21st century brought many social, political and demographic changes, but maybe one of the most spectacular ones is related to life expectancy, now at its record high in human history. The increase in lifespan occurred quite rapidly and it was almost solely due to improvements in living conditions (via advances in medicine, better sanitation, nutrition, etc.) as opposed to genetics. As a result, in only a few decades, last century's ‘old’ has become to some extent the new ‘mature’ age. The resulting shift in mortality rates implies that more and more people are spending a significant proportion of their life being old. But old age unfortunately comes with increased morbidity rates and sometimes extensive medical care needs, significantly impacting one's overall wellbeing and self-sufficiency in old age. I said ‘overall’ because, on the one hand, health may affect labor and retirement decisions of older people and so, play a crucial role in ensuring financial wellbeing. On the other hand, health also represents a measure of wellbeing in itself, and it is important that the extra years of life gained thanks to modern medicine are not spent in poor health or disability.
David Wise's edited volume collects a series of interesting and highly relevant papers capturing the most recent research on health in old age and on its role in shaping elderly financial wellbeing. The book is organized around four sections, dealing with health and disability, their determinants and the type of interventions that might drive their dynamics, as well as with their effect on financial security. Each section is internally coherent, with each research study followed by a short discussion that fleshes out potential avenues for further exploration. But perhaps more important, the four sections are also consistent with each other, providing a comprehensive and integrated view on the health of older people. Given their prevalence in today's society, these are perhaps the people we need to understand the most, their choices and circumstances (financial and otherwise) making a difference for the overall social landscape. The topics tackled, as well as the rich resources and interdisciplinary approaches used, make the book an essential read for economists, demographers, sociologists, gerontologists and statisticians alike. And the overall breath of perspectives considered should make it accessible to academics and policymakers, as well as to practitioners.
The first section of the book includes three studies that document the latest trends in health and morbidity and how to measure them. It starts by studying the morbidity timing and shows that, over time, disability rates have dropped among those who still have many years of life ahead, but remained constant for those within a year or two from death (Cutler et al.). Regardless of whether this morbidity compression towards the end of one's life is due to improved socio-environmental conditions or better diagnosis, health care (short and long terms) seems to play a crucial role. Hurd and co-authors in fact dedicate a full chapter to an in depth analysis of nursing homes stays (i.e., long-term care). Given that women, white people and non-smokers live longer, it is not surprising that these categories have the highest lifetime risk of entering a nursing home. Finally, the last study of this section (Kapteyn and Meijer) goes back to the origins and questions the concept of health. In doing so, it provides a very useful overview of alternative ways of generating health measures. Whether using self-reported or objective health indicators, these indexes prove to have comparable strengths and weaknesses and the authors do a great job identifying the trade-off between empirical properties and relation to economic behavior.
With a good picture of health (and health dynamics) in mind, we now turn to their causes and effects. Section III tackles the main determinants of health, while Section IV presents two interventions meant to improve it. Section II and the last study in Section IV focus on the effects of health on financial wellbeing in older age. Let us start from the causes and then move to the effects.
Undoubtedly, one of the most crucial determinants of health is nutrition. For instance, a diet low on iron may lead to iron deficiency anemia (IDA). In an experiment conducted in rural Bihar (India), Banerjee and co-authors find high prevalence of IDA, and corresponding low physical productivity and fast cognitive decline for the elderly, both associated with poverty. A smaller-scale intervention, however, shows that the adoption of new supplements is extremely sensitive to price (even if heavily subsidized). The opposite was true for the new drug-eluting stents (DES), introduced in the US in April 2003 with high reimbursements provided by Medicare. By the end of 2003, two thirds of the stents were DES, with higher quality hospitals and hospitals with more patients likely to benefit of DES adopting the technology first.
Other factors that influence health, physical or mental, are related to the social and labor context. Before the 1990s, for instance, early retirement was a popular phenomenon especially in Europe. Generous retirement provisions, access to leisure and relief from work-related stress are only some of its benefits. On the negative side, though, early retirement is usually related to health issues, and it comes with a significant erosion of social networks. This (external) social ties weakening triggers significantly negative effects on cognition (Borsch-Supan and Schuth), but this does not seem to drive the drop in optimism and rise in uncertainty with age (Kezdi and Willis). Moreover, strong (internal) family ties need not bring positive effect for elderly wellbeing, at least in the US. In fact, Deaton and Stone find that elderly Americans who live with people under 18 are less happy and more stressed, angry and worried than those who do not. These results, albeit not causal and most likely influenced by selection, draw our attention to the fertility-cohabitation gradient, as in many countries where elderly live in larger families they do not experience worse emotional outcomes. Turning finally to within-marriage ties, Banks et al. document a strong matching on family background and childhood health between spouses (especially if at their first partnership), both in the US and UK. But one's childhood health and family (socioeconomic status – SES ) background are also strong predictors of his/her adult health. However, while for men the SES-chronic illness link is established later in life, for women low family SES and mental problems in childhood translate into functional and mental conditions in late adulthood (Stonewasser et al.). Interestingly, these health conditions are strongly associated with whether one reaches retirement with positive non-pension wealth (and those who do are also more likely to have larger pension wealth). True enough, social security does provide a safety amount for low-wage workers when they retire, but for a considerable share of people this is not enough to keep them above the poverty line (Poterba et al.). One option to increase pension benefits for low-earners is by contributing to 401(k) or 403(b) with Roth option (contributions are non-deductible, but benefits can be withdrawn tax-free). Beshears and co-authors find, however, that very few people take advantage of this option, among them young people and men being more likely.
This book brilliantly achieves its goal of enhancing our understanding of the issues related to health and ageing in the 21st century. The type of research it presents is not only compelling, but also provides useful tools to assess the main challenges that an older population poses with respect to financing retirement and ensuring appropriate health care. I can hardly recommend a better read on a more pressing problem.
