A Model for Simulating Life Histories of the Elderly: Model Design and Implementation Plans

This paper provides a strategy for the development of a model of life-cycle change in functional status, economic well-being, and family composition, with particular attention to persons aged 65 and older. The overall goal is to use the model as the basis for individual-level projections of the later life cycle, that is, microsimulation. Specifically, the scope of the project includes: 1. Specification and estimation of equations for the dynamics of functional status, nursing home occupancy, income and death among those aged 65+, using data from the 1982, 1984, and 1989 National Long-Term Care Survey (NLTCS) linked to Medicare data for 1982-1993, based on extensions of the Grade of Membership (GoM) framework; 2. Developing equations for year-to-year income streams, determined jointly with changes of marital status, for all ages represented in the cohorts to be simulated; 3. Estimating parameters governing the dynamics of family composition (existence and characteristics of spouse, parent[s] and child[ren]); 4. Integrating the results of the above modeling efforts in a microsimulation computer program with the capacity to dynamically simulate life histories, focussing on the elderly population; 5. Validating the model by comparing its results to actual data where possible, analyzing uncertainty attached to the output from the microsimulation model, and conducting sensitivity analyses using alternative assumptions regarding trends in model parameters; and 6. Using microsimulation, producing disaggregated projections of the elderly population and its characteristics, for example cohort profiles of active life expectancy, or comparisons over time in the health, family structure and economic well-being of the oldest-old