High Income Pensioners Live Longer | Munich Center for the Economics of Aging - MEA

High Income Pensioners Live Longer

High Income Pensioners Live Longer

The more people earn, the longer they are likely to live. The relationship between income and health has been established for some time internationally and has now been confirmed empirically for pensioners in Germany in a MEA study. The research by Hans-Martin von Gaudecker from MEA and Rembrandt Scholz from the Max Planck Institute for Demographic Research involved analysing a broad swathe of data on several million pensioners. Owing to the lack of suitable data comparatively few studies have been carried out on this subject in Germany.

The authors draw on data produced by the Pension Insurance Research Data Center which has been providing researchers access to high-quality data records since 2004. The MEA study was, for example, able to include everyone who was receiving a pension in 2002. The final analysis produced extremely precise results based on data on 3.8 million pensioners. The research findings confirm what has been known internationally for several decades.

The key results of the study, which focused exclusively on male pensioners, are presented in Figure 1. The average life expectancy of a pensioner aged 65 is 15 years (right hand column in Figure 1). However, the mortality picture looks quite different if the life expectancy of people on different levels of pension is calculated. The life expectancy of a pensioner receiving less than one thousand Euros is under 14 years. Above the 1,800 Euros level a 65-year old pensioner can expect to live almost another 19 years. The 'benchmark pensioner', who has earned an average wage over a 45-year working life, received a pension in 2002 worth around 1,100 Euros and, at age 65, had a remaining life expectancy of fourteen and a half years.

It is important to emphasise that these results do not describe a causal relationship between income and mortality but merely show that they are correlated. It is still not clear whether the more affluent are able to buy better health, for example, or whether people suffering from ill health simply have lower earnings capacities. Another possibility is that income and mortality may be linked through a third factor. Higher education, for example, is known to lead to higher income. It is also established that well-educated people follow the therapeutic advice given by their doctors much more closely than other patients. As things stand, however, there is still a great deal of work to be done before more light can be shed on the relevant causal relationships and the influence of separate factors can be combined into a fuller picture.

more information:

Lifetime Earnings and Life Expectancy
MEA Discussion Paper: 102-06 Hans-Martin von Gaudecker, Rembrandt D. Scholz