Working Paper: NBER ID: w2326
Authors: Michael D. Hurd
Abstract: I estimate the fraction of widows that will be in poverty by projecting the economic status, as measured in 1979, of a cohort of the elderly. The projections are based on an economic model of consumption behavior. I define and estimate a consumption-based measure of poverty status that, I believe, is more appropriate for the elderly than the usual income-based measure. According to the projections, the fraction of widows in poverty should not increase substantially as the 1979 cohort ages. However, the fraction in poverty depends critically on the definition: the differences between the consumption- and income- based measures are large. But even more important is the valuation put on Medicare/Medicaid: for two reasonable valuations, the fractions in poverty are very different.
Keywords: Elderly; Poverty; Consumption; Social Security; Medicare/Medicaid
JEL Codes: I3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| initial economic resources (E22) | future economic status of the elderly (J14) |
| future economic environments (P17) | future economic status of the elderly (J14) |
| individual choices (D01) | future economic status of the elderly (J14) |
| random future events (C69) | future economic status of the elderly (J14) |
| initial conditions (C62) | poverty rates (I32) |
| life cycle behavior (D15) | poverty rates (I32) |
| definition of poverty (I32) | projected fractions in poverty (I32) |
| inclusion of Medicare/Medicaid value (I18) | fraction of widows in poverty (I32) |
| bequeathable wealth exhaustion (D14) | consumption convergence to annuity income (D15) |
| economic growth (O49) | social security benefits increases (H55) |
| social security benefits increases (H55) | reduction in poverty rates among the young elderly (I32) |