1. Education and its Effects on Survival, Income and Health of those aged Sixty-five and Over
Silvia Lui and Martin Weale
National Institute of Economic and Social Research
18th July 2012

2. Missing aspects of returns to education
Income beyond retirement age. Employers contributions pay for much of pensions. They are a component of labour income left out of most analysis of returns to education.
Health beyond retirement. Good health is valued. Any influence of education on health should be allowed for.
Survival. Life is valued. Educated people may have higher incomes, better health and enjoy them for longer.
Health effects for people younger than sixty-five are not investigated.

3. Indicators Life expectancy. Healthy life expectancy.
Expected discounted income.
Expected discounted income plus an appropriate value for healthy life.
Estimate by educational status.

4. Attribution of Income
Pensions may accrue to widowed spouses as a result of their late spouse’s contributions.
Cannot expect the same relationship as between earnings and education.
After assortative mating such income might be a consequence of education even if not ‘earned’ by a widow.

5. The British Household Panel Survey
Consider original sample members on reaching sixty-five or at start of the panel if sixty-five or older then.
Use self-reported health status as i) indicator of health and ii) variable to explain the risk of death.
Treat household equivalised income as exogenous conditional on income at 65/when first observed.

6. Non-response. Assume respondents drop out once non-response is reported. (In fact a small number re-enter survey).
Death. Survey attempts to collect information on death.
Income from ISER data set.
Smoking recorded (cigarettes only).

7. Health. Very Poor, Poor, Fair, Good Excellent relative to others of same age.
Treat as dichotomous- good or excellent as good health, other categories as bad health.

8. Education 0. Few Qualifications GCSE or equivalent Sub-A-level
2 A-levels or equivalent, ONC/OND
HNC/HND, teaching and nursing qualifications. Degrees.

9. Estimation Strategy
Originally attempted to estimate tri-variate double censored probit model of response, survival and health transitions. Attempt failed.
Tested for pair-wise independence using bivariate censored probit.
Survival/Response
Good Health/Survival and Response
Good Health/Survival

10. Income and Qualifications
Level
Men
Women
Equivalised Inc (£)
Observations
10436
9644
3646
6570 1
12361
11332
1571
1470 2
15877
13302
736
855 3
14440
13296
444
171 4
18801
15443
1012
1314

11. Health and Smoking Qual. In Poor Health Smoking Level Men Women 17.2%
17.2%
17.9%
19.4%
16.7% 1
11.3%
14.6%
15.3%
11.0% 2
10.1%
7.3%
9.5% 3
9.7%
18.7%
13.1%
9.4% 4
4.8%
10.3%
5.9%
7.9%

12. Mortality Rates Men Women Edcn/Age 0-1 2-4 65-69 2.1% 1.0% 1.6% 0.8%
70-74
3.6%
2.9%
2.0%
2.4%
75-79
5.4%
3.2%
3.4%
80-84
8.4%
3.7%
4.4%
4.3%
85+
12.2%
9.1%
10.9%
6.8%

13. Mortality and Income Men Women Age Below median Above median 65-69
2.8%
1.2%
2.1%
1.0%
70-74
4.0%
2.7%
2.3%
1.9%
75-79
5.7%
3.6%
3.3%
3.1%
80-84
9.0%
4.2%
4.9%
85+
13.4%
8.0%
11.3%
8.4%

14. Income and Health Men Women Income Poor health Good health
Below median
7.8%
42.2%
8.4%
41.6%
Above median
5.3%
44.7%
7.2%
42.8%

15. Non-response Men Women Edcn/Age 0-1 2-4 65-69 5.5% 3.7% 4.3% 2.9%
70-74
3.9%
1.3%
3.5%
1.2%
75-79
3.3%
2.3%
4.1%
1.8%
80-84
3.0%
5.7%
2.4%
85+
6.2%
8.1%
6.8%

16. Ordered Probit- Education Status
Men
Women
Coeff
s.d
Birth Year
0.019
0.005
0.028
1933/later
0.212
0.108
0.054
0.103
Cut 1
0.762
0.17
1.399
0.147
Cut 2
1.334
0.171
1.846
0.149
Cut 3
1.64
0.173
2.164
0.151
Cut 4
1.921
0.175
2.238
Obs
1252
1629

17. Tests for Independence
χ21
Men
Women
Survival/
Response
1.2
0.6
Good Health/Survival and Response
0.4
0.0
Good Health/Survival
0.1
1.8
c21 likelihood ratio test

18. Men’s Income, Health and Mortality

19. Women’s Health, Income and Mortality

20. Health and Income after 65: Men

21. Health and Income after 65: Women

22. Conclusions
Educational status has a clear and significant effect on men’s incomes after retirement.
Men’s mortality rates are significantly negatively related to income.
This component of level 4 over level 2 education is worth £12500 discounted back to age 21.