Expectation Formation of Older Married Couples and the Rational Expectations Hypothesis

This paper tests the Rational Expectations (RE) hypothesis regarding retirement expectations of married older American couples, controlling for sample selection and reporting biases. In prior research we found that individual retirement expectation formation was consistent with the Rational Expectation hypothesis, but in that work spousal considerations were not analyzed. In this research we take advantage of panel data on expectations to test the RE hypothesis among married individuals as well as joint expectations among couples. We find that regardless of whether we assume that married individuals form their own expectations taking spouse’s information as exogenous, or the reports of the couple are the result of a joint expectation formation process, their expectations are consistent with the RE hypothesis. Our results support a wide variety of models in economics that assume rational behavior for married couples.

Evaluating the reliability of NAND multiplexing with PRISM

Probabilistic-model checking is a formal verification technique for analyzing the reliability and performance of systems exhibiting stochastic behavior. In this paper, we demonstrate the applicability of this approach and, in particular, the probabilistic-model-checking tool PRISM to the evaluation of reliability and redundancy of defect-tolerant systems in the field of computer-aided design. We illustrate the technique with an example due to von Neumann, namely NAND multiplexing. We show how, having constructed a model of a defect-tolerant system incorporating probabilistic assumptions about its defects, it is straightforward to compute a range of reliability measures and investigate how they are affected by slight variations in the behavior of the system. This allows a designer to evaluate, for example, the tradeoff between redundancy and reliability in the design. We also highlight errors in analytically computed reliability bounds, recently published for the same case study

What to Expect when you are Expecting Rationality: Testing Rational Expectations using Micro Data

This paper tests the Rational Expectations (RE) hypothesis regarding retirement expectations, controlling for sample selection, reporting biases, and unobserved heterogeneity. We find that retirement expectations in the Health and Retirement Study (HRS) are consistent with the RE hypothesis. We also examine how a wide array of factors, such as wealth, income, health insurance, pensions, and health status influence retirement expectations formation using panel data from all available waves of the HRS. We further analyze how new information affects the evolution of retirement expectations and discover that, on average, individuals correctly anticipate most uncertain events when planning their retirement, except for some health conditions and economic factors. Our results have important implications for a wide variety of models in economics that assume rational behavior.

A Dynamic Model of Retirement and Social Security Reform Expectations: A Solution to the New Early Retirement Puzzle

The need for Social Security Reform in the next years is hardly a matter of debate. Therefore, the widespread believe among Americans that Social Security will not be able to pay benefits in the long run at the level that was anticipated, does not come as a surprise. The government acknowledges the situation, and predicts that substantial benefits cuts will be necessary, yet no legislation has been passed to tackle the problem. Researchers, however, have rarely modeled the uncertainty over Social Security reform and benefit levels, and how they affect claiming behavior and retirement. The purpose of this paper is to assess the extent to which these perceptions of future cuts might explain the puzzle of earlier take-up despite bigger penalties to doing so in the presence of increasing longevity. By introducing a small amount of uncertainty (based on self-reported responses to questions regarding expectations over future cuts) of a relatively small cut (compared with what the government reports as necessary to solve the crisis) in a dynamic life-cycle model of retirement, we are able to match the claiming behavior observed in the data, without relying on heterogeneous preferences. Our results support the hypothesis that expectations over future benefits are affecting current behavior. We find that a mis-specified dynamic retirement model would erroneously predict that an increase in the NRA would delay claiming behavior and increase labor supply at older ages. Once the appropriate earnings test incentives are modeled, and we account for the probability of reforms to the system, an increase in the NRA has little effect on claiming behavior, and it can even increase the proportion of individuals claiming before the NRA.

Disability, capacity for work and the business cycle: An international perspective

An important policy issue in recent years concerns the number of people claiming disability benefits for reasons of incapacity for work. We distinguish between ‘work disability’, which may have its roots in economic and social circumstances, and ‘health disability’ which arises from clear diagnosed medical conditions. Although there is a link between work and health disability, economic conditions, and in particular the ‘business cycle’ and variations in the risk of unemployment over time and across localities, may play an important part in explaining both the stock of disability benefit claimants and inflows to and outflow from that stock. We employ a variety of cross?country and country?specific household panel data sets, as well as administrative data, to test whether disability benefit claims rise when unemployment is higher, and also to investigate the impact of unemployment rates on flows on and off the benefit rolls. We find strong evidence that local variations in unemployment have an important explanatory role for disability benefit receipt, with higher total enrolments, lower outflows from rolls and, often, higher inflows into disability rolls in regions and periods of above?average unemployment. Although general subjective measures of selfreported disability and longstanding illness are also positively associated with unemployment rates, inclusion of self?reported health measures does not eliminate the statistical relationship between unemployment rates and disability benefit receipt; indeed including general measures of health often strengthens that underlying relationship. Intriguingly, we also find some evidence from the United Kingdom and the United States that the prevalence of self?reported ‘objective’ specific indicators of disability are often pro?cyclical – that is, the incidence of specific forms of disability are pro?cyclical whereas claims for disability benefits given specific health conditions are counter?cyclical. Overall, the analysis suggests that, for a range of countries and data sets, levels of claims for disability benefits are not simply related to changes in the incidence of health disability in the population and are strongly influenced by prevailing economic conditions. We discuss the policy implications of these various findings.Disability, capacity for work, business cycle, international comparisons

Effects of Legal and Unauthorized Immigration on the U.S. Social Security System

Immigration is having an increasingly important effect on the social insurance system in the United States. On the one hand, eligible legal immigrants have the right to eventually receive pension benefits, but also rely on other aspects of the social insurance system such as health care, disability, unemployment insurance, and welfare programs, while most of their savings have direct positive effects on the domestic economy. On the other hand, most undocumented immigrants contribute to the system through taxed wages, but they are not eligible for these programs unless they attain legal status, and a large proportion of their savings translates into remittances, which have no direct effects on the domestic economy. Moreover, a significant percentage of immigrants migrate back to their countries of origin after a relatively short period of time, and their savings while in the US are predominantly in the form of remittances. Therefore, any analysis that tries to understand the impact of immigrant workers on the overall system has to take into account the decisions and events these individuals face throughout their lives, as well as the use of the government programs they are entitled to. We propose a life-cycle OLG model in a General Equilibrium framework of legal and undocumented immigrants’ decisions regarding consumption, savings, labor supply and program participation to analyze their role in the financial sustainability of the system. Our analysis of the effects of potential policy changes, such as giving some undocumented immigrants legal status, shows increases in capital stock, output, consumption, labor productivity, and overall welfare. The effects are relatively small in percentage terms, but considerable given the size of our economy.

The Annuity Puzzle Revisited

There is a pressing need for a better understanding of how access to various types of financial products can impact retirement behavior, especially if this access comes from a change in the incentive scheme through a reform of the current Social Security system. This is especially important if we are to provide useful policy recommendations regarding reform to the current social insurance system. In this paper I focus on the “annuity puzzle,” the question as to why the annuity market is so narrow. I present a model that endogenizes the annuity decision along with the consumption/saving and labor supply decisions. This research enhances our understanding of how annuities work in a life cycle model with more realistic characterizations of the choices and incentives that individuals face. My results show that the low rates of annuitization can be the product of optimal decision making by individuals in a life cycle model which endogenizes the labor/leisure decision and accounts for Social Security. The government should pay particular attention to the rules regarding withdrawal of benefits through annuities or lump-sums when introducing individual retirement accounts or other privatization schemes, given the interaction between retirement incentives and the attractiveness of annuities.

The effects of employment uncertainty and wealth shocks on the labor supply and claiming behavior of older American workers

Unemployment rates in developed countries have recently reached levels not seen in a generation, and workers of all ages are facing increasing probabilities of losing their jobs and considerable losses in accumulated assets. These events likely increase the reliance that most older workers will have on public social insurance programs, exactly at a time that public finances are suffering from a large drop in contributions. Our paper explicitly accounts for employment uncertainty and unexpected wealth shocks, something that has been relatively overlooked in the literature, but that has grown in importance in recent years. Using administrative and household level data we empirically characterize a life-cycle model of retirement and claiming decisions in terms of the employment, wage, health, and mortality uncertainty faced by individuals. Our benchmark model explains with great accuracy the strikingly high proportion of individuals who claim benefits exactly at the Early Retirement Age, while still explaining the increased claiming hazard at the Normal Retirement Age. We also discuss some policy experiments and their interplay with employment uncertainty. Additionally, we analyze the effects of negative wealth shocks on the labor supply and claiming decisions of older Americans. Our results can explain why early claiming has remained very high in the last years even as the early retirement penalties have increased substantially compared with previous periods, and why labor force participation has remained quite high for older workers even in the midst of the worse employment crisis in decades.employment uncertainty, wealth shocks, retirement, labor supply, life-cycle models

Expectations in Micro Data: Rationality Revisited

An increasing number of longitudinal data sets collect expectations information regarding a variety of future individual level events and decisions, providing researchers with the opportunity to explore expectations over micro variables in detail. We provide a theoretical framework and an econometric methodology to use that type of information to test the Rational Expectations hypothesis in models of individual behavior, and present tests using two different panel data sets.

ASOCIACIÓN DE LA SATISFACCIÓN SEXUAL EN PACIENTES CON VASECTOMÍA Y SIN VASECTOMÍA DE 20 A 40 AÑOS ADSCRITOS EN LA UMF 93.

la vasectomía es un proceso simple con una alta tasa de éxito (> 99%) y complicaciones mínimas, hoy en día es poco utilizada en todo el mundo, especialmente en países en desarrollo. Se cree que el uso de la vasectomía se desalienta por los temores de castración, pérdida de la función eréctil, pérdida de la libido y factores socioculturales como el riesgo de discapacidad sexual después de la vasectomía y una sensación de degradación. Asociar el nivel de satisfacción sexual en pacientes de 20 a 40 años de edad con vasectomía y sin vasectomía, adscritos en la UMF 93.UAEM, el autor