Contributions of Economists and Economics to Study of Aging

1. Contributions of Economists and Economics to Study of Aging Robert A. Moffitt Johns Hopkins University May 18, 2011

2. Sponsorship • This meeting: sponsored by the American Economic Association, Committee on Government Relations • Dan Newlon: DC Director • Two of us are members (me, Skinner) • Purpose: to review samples of research conducted by economists on aging and to emphasize the importance of NIA support to the many major contributions of economics • Me: I am an observer, not a participant

3. Economics of Aging is now a major subfield within economics Dozens, perhaps hundreds, of senior as well as junior researchers and new Ph.D. dissertations in the area Many different topics (see below), aided by new data BSR support has been a major contributor to this development

4. Economics Contributions Specific research areas and topics An organizing framework Careful attention to causality Policy focus Data Collection Exploration of new areas: behavioral economics, cognition, psychology, neuroeconomics, biomarkers/genomics

5. I. Specific Research Areas Health economics: functioning of the health care system, design and effects of health insurance and financing, comparative effectiveness, technology diffusion, cost analysis and projections Retirement economics: causes and effects; health-employment nexus and relationship; retirement date, savings, wealth accumulation and assets Population Aging (Ron Lee)

6. II. Organizing Framework Economics has a very general model of behavior that allows economic considerations, health factors, and psychology into a coherent whole with explicit causal directions The model does not require “rational man” Is an integrative model Other approaches and disciplines do not have the same comprehensiveness

7. III. Careful Attention to Causality While there are many questions that can, and have been, tested with randomized trials (Newhouse: Rand Health Insurance Experiment; default experiments), most economics research must be observational Economists have paid more attention to careful modeling of causality than any other observational discipline (Ex: Cutler work on effectiveness of heart attack revascularization; distance to hospital)

8. IV. Policy Focus Much if not most economics has a direct policy focus Huge literature on the effect of the Social Security retirement program Similarly large literatures on the effects of Medicare (incl. Part D) Medicaid on various outcomes, including health outcomes (not just retirement); SSDI as well (Autor-Duggan) Health care reform, health insurance reform: major literatures

9. V. Leaders in Major Data Collection Efforts HRS the leading example Hugely influential study of retirement but also health assessments, disability; now biomeasures and genomics Extended to large number of other countries PSID supplements on health status, disability; linkages to Medicare claims data and cause-of-death data

10. VI. Openness to Exploration of New Approaches Behavioral economics; study of cognition; neuroeconomics; incorporation of other aspects of psychology; subjective well-being But, in every case, put into the economists’ organizing framework, the “model” which allows the complex relationships to be given coherence

11. Now on to examples