The Evolution of Health over the Life Cycle
Roozbeh Hosseini, Karen A. Kopecky, and Kai Zhao
Working Paper 2019-12
We construct a unified objective measure of health status: the frailty index, defined as the cumulative sum of all adverse health indicators observed for an individual. First, we show that the frailty index has several advantages over self-reported health status, particularly when studying health dynamics. Then we estimate a stochastic process for frailty dynamics over the life cycle. We find that the autocovariance structure of frailty in panel data strongly supports a process that allows the conditional variance of frailty shocks to increase with age. Our frailty measure and dynamic process can be used by researchers to study the evolution of health over the life cycle and its economic implications.
JEL classification: I10, I14, C33
Key words: health, frailty index, life cycle profiles
The authors thank Jordan Herring for outstanding research assistance and Toni Braun, Eric French, Melinda Pitts, and Dan Waggoner for insightful comments and suggestions. They also benefited from comments received at the 2018 Midwest Macro Meetings, the 2018 Society of Economic Dynamics, the 2018 Michigan Retirement Research Center Workshop, and seminar participants at the Federal Reserve Bank of Atlanta and the University of Georgia. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility.
Please address questions regarding content to Roozbeh Hosseini, Department of Economics, Terry College of Business, University of Georgia, 620 South Lumpkin Street, Athens, GA 30602; Karen A. Kopecky, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta, GA 30309; or Kai Zhao, Department of Economics, University of Connecticut, 365 Fairfield Way, Storrs, CT 06269-1063.
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