Pension Research Council: The Boettner Center: Working Paper Library: 2007 Series

Working Paper Library: 2007 Series

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A New Method for Attributing Changes in Life Expectancy to Various Causes of Death, with Application to the United States
Hiram Beltran-Sanchez & Samuel Preston
BWP2007-01
This article focuses on decomposition of changes in life expectancy by cause of death. We propose an alternative to Arriaga's (1984) method for performing such decompositions. We apply our method to changes in life expectancy in the United States between 1970 and 2000 and compare results to those produced using Arriaga's formulation. The major difference between the approaches pertains to diseases prominent at older ages such as cardiovascular disease. For applications where causes of death are the central focus, our technique appears to have a modest advantage because of its conceptual clarity and attractive byproducts in the form of cause-deleted life tables.

The Marital Process and HIV/AIDS in Rural Malawi
Shelley Clark, Michelle Poulin, Hans-Peter Kohler
BWP2007-02
Using both qualitative and quantitative data from young men and women in rural Malawi, this paper takes an in-depth look at how youths in an AIDS-afflicted sub-Saharan country Malawi attempt to achieve the dual goals of avoiding HIV/AIDS and finding a suitable spouse. For youths in Malawi facing AIDS epidemics, we show that the process leading to marriage, with its concurrent rapid changes in sexual partnerships and sexual behaviors, is integrally related to HIV/AIDS risks. In addition, concerns about HIV/AIDS appear to be influencing adolescentsâ€™ marital aspirations with respect to the timing of marriage as well as the selection of spousal partners. Many youths are clearly failing to find safe pathways into marriage, indicating a strong need for far greater research and policy attention on the dynamic relationship between HIV risks and the marital process.

Divorce-Law Changes, Household Bargaining, and Married Womenâ€™s Labor Supply Revisited
Betsey Stevenson
BWP2007-03
Divorce law changes made in the 1970s affected marital formation, dissolution, and bargaining within marriage. By altering the terms of the marital contract these legal changes impacted the incentives for women to enter and remain in the labor force. Whereas earlier work had suggested that the impact of unilateral divorce on female employment depended critically on laws governing property division, I show that these results are not robust to alternative specifications and controls. I find instead that unilateral divorce led to an increase in both married and unmarried female labor force participation, regardless of the underlying property laws.

Marriage and Divorce: Changes and their Driving Forces
Betsey Stevenson & Justin Wolfers
BWP2007-04
We document key facts about marriage and divorce, comparing trends through the past 150 years and outcomes across demographic groups and countries. While divorce rates have risen over the past 150 years, they have been falling for the past quarter century. Marriage rates have also been falling, but more strikingly, the importance of marriage at different points in the life cycle has changed, reflecting rising age at first marriage, rising divorce followed by high remarriage rates, and a combination of increased longevity with a declining age gap between husbands and wives. Cohabitation has also become increasingly important, emerging as a widely used step on the path to marriage. Out-of-wedlock fertility has also risen, consistent with declining â€œshotgun marriagesâ€. Compared with other countries, marriage maintains a central role in American life. We present evidence on some of the driving forces causing these changes in the marriage market: the rise of the birth control pill and womenâ€™s control over their own fertility; sharp changes in wage structure, including a rise in inequality and partial closing of the gender wage gap; dramatic changes in home production technologies; and the emergence of the internet as a new matching technology. We note that recent changes in family forms demand a reassessment of theories of the family and argue that consumption complementarities may be an increasingly important component of marriage. Finally, we discuss the welfare implications of these changes.

Hidden Regret and Advantageous Selection in Insurance Markets
Rachel J. Huang, Alexander Muermann, Larry Y. Tzeng
BWP2007-05

We examine insurance markets in which there are two types of customers: those who regret suboptimal decisions and those who donâ€™t. In this setting, we characterize the equilibria under hidden information about the type of customers and hidden action. We show that both pooling and separating equilibria can exist. Furthermore, there exist separating equilibria that predict a positive correlation between the amount of insurance coverage and risk type, as in the standard economic models of adverse selection, but there also exist separating equilibria that predict a negative correlation between the amount of insurance coverage and risk type, i.e. advantageous selection. Since optimal choice of regretful customers depends on foregone alternatives, any equilibrium includes a contract which is not purchased.

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