Beyond the business cycle - factors driving aggregate mortality rates

This article provides a comprehensive econometric analysis of factors driving aggregate mortality rates over time. It differs from previous studies in this field by simultaneously considering an extensive set of macroeconomic, socio-economic and ecological factors as explanatory variables. Germany is chosen as an indicative example for other industrialized countries due to its advanced demographic transition process. Our regression analysis, which covers the time interval 1956-2004, indicates that sex- and age-specific mortality rates vary substantially in their response to external factors. Strongest associations are found with changes in real GDP, flu epidemics and the two life style variables alcohol and cigarette consumption in both univariate and multivariate setups. Further analysis shows that these effects are primarily contemporary, while other indicators such as weather conditions exert lagged effects. By combining variables in a multivariate model the share of explained data volatility can be substantially increased.Aggregate mortality, business cycle, socio-economic factors, multivariate model

Mortality modeling: Lee-Carter and the macroeconomy

Using data for six OECD countries, this paper studies the effect of macroeconomic conditions on the mortality index kt in the well-known Lee-Carter model. Significant correlations are found with real GDP growth rates in Australia, Canada, and the United States, and with unemployment rate changes in Japan, for the period 1950–2005. In recent years, the relationship between the state of the economy and mortality is found to change from procyclical to countercyclical in all six countries. Based on these findings, variants of the Lee-Carter model are proposed that capture a substantial fraction of the variation in the mortality index.Demography, Lee-Carter, business cycle, time series model

Stochastic Mortality, Subjective Survival Expectations, and Individual Saving Behavior

Theoretical studies suggest that unexpected changes in future mortality and survival probabilities (stochastic mortality) are important determinants of individuals’ decisions about consumption, saving, asset allocation, and retirement timing. Using data on subjective survival expectations elicited in the Survey of Health, Ageing and Retirement in Europe (SHARE) and corresponding life table data from the Human Mortality Database (HMD), we find evidence of respondents’ awareness of stochastic mortality. We also find that respondents’ saving behavior is influenced by stochastic mortality perceptions.stochastic mortality, subjective survival expectations, forecast dispersion, savings behavior

Beyond the business cycle

This article provides a comprehensive econometric analysis of factors driving aggregate mortality rates over time. It differs from previous studies in this field by simultaneously considering an extensive set of macroeconomic, socio-economic and ecological factors as explanatory variables. Germany is chosen as an indicative example for other industrialized countries due to its advanced demographic transition process. Our regression analysis, which covers the time interval 1956-2004, indicates that sex- and age-specific mortality rates vary substantially in their response to external factors. Strongest associations are found with changes in real GDP, flu epidemics and the two life style variables alcohol and cigarette consumption in both univariate and multivariate setups. Further analysis shows that these effects are primarily contemporary, while other indicators such as weather conditions exert lagged effects. By combining variables in a multivariate model the share of explained data volatility can be substantially increased

Stochastic Mortality, Macroeconomic Risks, and Life Insurer Solvency

Motivated by a recent demographic study establishing a link between macroeconomic fluctuations and the mortality index kt in the Lee-Carter model, we assess the impact of macroeconomic fluctuations on the solvency of a life insurance company. Liabilities in our stochastic simulation framework are driven by a GDP-linked variant of the Lee-Carter mortality model. Furthermore, interest rates and stock prices are allowed to react to changes in GDP, which itself is modeled as a stochastic process. Our results show that insolvency probabilities are significantly higher when the reaction of mortality rates to changes in GDP is incorporated.Life insurance, asset-liability management, stochastic mortality, Lee-Carter model, business cycle

Sociodemographic, Economic, and Psychological Drivers of the Demand for Life Insurance

We exploit the natural experiment of the 2005 income tax reform in Germany to study the effects of tax incentives on consumer behavior in life insurance markets. Our empirical analysis of sociodemographic, economic, and psychological household characteristics elicited in the German SAVE study shows that two very different consumer groups buy (endowment) life insurance before and after the tax reform. We find that education plays a central role in reactions to the modified tax environment. Our stylized characterization of “arbitrageur” and “straggler” buyers will assist both life insurance firms and regulatory authorities design effective policies

Long-Term Care Insurance Financing Using Home Equity Release: Evidence from an Online Experimental Survey

This paper explores new mechanisms to fund long-term care using housing wealth. Using data from an online experimental survey fielded to a sample of 1,200 Chinese homeowners aged 45-64, we assess the potential demand for new financial products that allow individuals to access their housing wealth to buy long-term care insurance. We find that access to housing wealth increases the stated demand for long-term care insurance. When they could only use savings, participants used on average 5% of their total (hypothetical) wealth to purchase long-term care insurance. When they could use savings and a reverse mortgage, participants used 15% of their total wealth to buy long-term care insurance. With savings and home reversion, they used 12%. Reverse mortgages do not require regular payments until the home is sold, while home reversion involves a partial sale and leaseback. Our results inform the design of new public or private sector programs that allow individuals to access their housing wealth while still living in their homes

Mental Health Determinants Among a Psychiatric Outpatient Sample of Vietnamese Migrants in Germany

Background: Mental health risk-factors for Asian migrants have been studied almost exclusively in the US, Canada, and Australia but not in European countries. Therefore, we aimed to identify sociodemographic, clinical, and migration-surrounding factors associated with experienced mental distress among Vietnamese migrants in Germany. Method: 305 Vietnamese migrants utilizing Germany's first Vietnamese psychiatric outpatient clinic filled out at admission the Brief-Symptom-Inventory 18 (BSI-18) as well as a questionnaire on 22 potential mental health determinants. Using a multiple linear regression model, we identified those sociodemographic, clinical, and migration-surrounding factors that were significantly related to the Global Severity Index (GSI) of the BSI-18. Results: The factors unemployment (B = -6.32, p = 0.014), financial problems (B = -10.71, p < 0.001), no or only little religious involvement (B = -3.23, p = 0.002), no psychiatric precontact (B = -7.35, p = 0.004), previous migration experiences (B = 8.76, p = 0.002), and perceived discrimination (B = 6.58, p = 0.011) were found to significantly increase the level of mental distress according to the BSI-GSI. Conclusion: Based on these results, we were able to construct a mental health risk-profile for Vietnamese migrants in Germany, which aims to detect candidates for psychiatric problems earlier and supply them with customized prevention and therapy options

Mortality modeling

Using data for six OECD countries, this paper studies the effect of macroeconomic conditions on the mortality index kt in the well-known Lee-Carter model. Significant correlations are found with real GDP growth rates in Australia, Canada, and the United States, and with unemployment rate changes in Japan, for the period 1950–2005. In recent years, the relationship between the state of the economy and mortality is found to change from procyclical to countercyclical in all six countries. Based on these findings, variants of the Lee-Carter model are proposed that capture a substantial fraction of the variation in the mortality index

Stochastic Mortality, Subjective Survival Expectations, and Individual Saving Behavior

Theoretical studies suggest that unexpected changes in future mortality and survival probabilities (stochastic mortality) are important determinants of individuals’ decisions about consumption, saving, asset allocation, and retirement timing. Using data on subjective survival expectations elicited in the Survey of Health, Ageing and Retirement in Europe (SHARE) and corresponding life table data from the Human Mortality Database (HMD), we find evidence of respondents’ awareness of stochastic mortality. We also find that respondents’ saving behavior is influenced by stochastic mortality perceptions