Inequality in Life…and Life Expectancy

Happy New Year! Now let’s talk about death. New Year’s Resolution: try to stop mentioning death in the first two sentences of conversation. Related Resolution: get invited to at least one New Year’s Eve Party this year. Anyway…

I’ve spent the last few months on this blog writing about inequality in life. One big take away is that middle-income workers have been losing out. Specifically, I showed that in the last forty years, these workers’ incomes have hardly grown. Technology, the loss of bargaining power, and trade have all likely played a role. But, whatever the cause of this stall, it has a powerful effect: rising life expectancy inequality.

The topic of life expectancy inequality has generated a lot of interest recently. Much of it has been fueled by research by Anne Case and Angus Deaton. They showed that middle-age white workers without a college education saw increased rates of death over the last several decades. Their hypothesis is one of cumulative disadvantage. Basically, the idea is that these workers entered the labor market at a time when things were going south for some of the reasons above. All those years of stress ultimately led to higher rates of death. And, the specific causes — higher rates of suicide, alcohol deaths, and drug overdoes — point to economic despair.

Recently, I and some coauthors had a paper published on this very topic. I want to show you some of the results to illustrate what’s going on. And, if you’d rather listen to me than read what I write (or, if you really like hearing about death, both!), here’s a podcast I did on the same topic:


Rising Life Expectancy Inequality

In the paper, my coauthors and I began by looking at life expectancy inequality at age 65 (a commonly chosen age in research on mortality) by education. Specifically, we divided people into four equally sized educational groups and looked at the least and most educated. We then looked at how many additional years these individuals would have been expected to live in 1979 and in 2011. Figure 1 shows the basic result — rising inequality. In 1979, the least educated men could be expected to live one less year than the most educated men. By 2011, it was a three year gap. For women, the increase in inequality was similar.

Figure 1. Life Expectancy at 65 for Men and Women by Educational Status

Note: Shows “period” life expectancy at age 65, which means we did not factor in future improvements in mortality. Calculations used the U.S. Census Bureau’s National Longitudinal Mortality Study.

One group also really lagged behind: the least educated women. Between 1979 and 2011, the least educated men saw an increase in life expectancy of 4.0 years. The least educated women saw an increase of only 1.4 years. To put it a bit differently, the least educated group of women in 2011 have about the same life expectancy as the most educated group did way back in 1979: 83.7 versus 83.4. These women are basically 32 years behind their more educated counterparts.

It’s also worth noting the good news in the figure — all groups, even the least educated, saw an increase in life expectancy. This result would seem to fly in the face of Case and Deaton, who found people were actually dying more. It turns out, the difference is simple to explain. They looked at a smaller sub-sample of the population, at different ages, and over a different time period.

When we restrict our sample to the same group — white individuals age 45-54 between 1999 and 2011 — we see the same pattern. The least educated men in this group saw their death rates increase by 0.5 percent each year over that period. Women were even worse, experiencing increases of 2.0 percent. By comparison, the most educated men and women in this group saw their death rates decrease by 1.0 and 2.5 percent respectively. Recently, all that inequality in income seems to be leading to an inequality in death.

Conclusion and Policy

It can be easy to ignore income inequality. We can tell ourselves that some people work harder or do jobs that are more valuable. We can tell ourselves that some people make less because they do jobs that give them purpose. And we can tell ourselves that, in any case, at least the progress generated by capitalism in terms of things like health care translates to better lives for all.

Heck, that last point may have even been true in the past. But, recently, life expectancy inequality is on the rise, and for some, death rates are actually increasing. And, some good economists see a link between this trend, economic inequality, and deaths of despair. All of this suggests that policies that reduce economic inequality could lead to reductions in life expectancy inequality.

But, I want to make a slightly different policy point. Rising life expectancy inequality erodes the very purpose of some of our most treasured programs. In particular, the Social Security program is a great equalizer. It ensures that almost every worker gets a retirement benefit. Furthermore, it gives lower earning workers a bigger benefit relative to their income than higher income workers, i.e., it’s progressive.

Here’s the thing, the “Full Retirement Age” for Social Security is increasing, and will soon be 67. That increase means that workers will need to work until age 67 to get their full benefit. If they retire earlier, they will get a benefit reduction. The earlier the retirement, the bigger the reduction. But, a low earning worker may increasingly want to retire earlier — after all, they aren’t going to live as long as their high-income counterparts. Recent studies show clearly that rising life expectancy inequality substantially reduces Social Security’s progressivity.

So, policies like an increase in the Full Retirement Age hurt these workers more. Despite this fact, policymakers often cite further increasing the Full Retirement Age as a way to bring Social Security’s fiscal situation under control. You now know that this is unfair, and that one consequence of rising economic inequality is rising life expectancy inequality. Next week, we will turn back to life, and begin looking at inequality in marriage.

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