Volume 31 - Article 30 | Pages 913–940  

An empirical analysis of the importance of controlling for unobserved heterogeneity when estimating the income-mortality gradient

By Adriaan Kalwij

Abstract

Background: Statistical theory predicts that failing to control for unobserved heterogeneity in a Gompertz mortality risk model attenuates the estimated income-mortality gradient toward zero.

Objective: I assess the empirical importance of controlling for unobserved heterogeneity in a Gompertz mortality risk model when estimating the income-mortality gradient. The analysis is carried out using individual-level administrative data from the Netherlands over the period 1996-2012.

Methods: I estimate a Gompertz mortality risk model in which unobserved heterogeneity has a gamma distribution and left-truncation of life durations is explicitly taken into account.

Results: I find that, despite a strong and significant presence of unobserved heterogeneity in both the male and female samples, failure to control for unobserved heterogeneity yields only a small and insignificant attenuation bias in the negative income-mortality gradient.

Conclusions: The main finding, a small and insignificant attenuation bias in the negative income-mortality gradient when failing to control for unobserved heterogeneity, is positive news for the many empirical studies, whose estimations of the income-mortality gradient ignore unobserved heterogeneity.

Author’s Affiliation

• Adriaan Kalwij - Universiteit Utrecht, the Netherlands EMAIL

Other articles by the same author/authors in Demographic Research

Is the accuracy of individuals' survival beliefs associated with their knowledge of population life expectancy?
Volume 45 - Article 14

Lifetime income and old age mortality risk in Italy over two decades
Volume 29 - Article 45

Similar articles in Demographic Research

Collecting data on HIV/AIDS mortality during household surveys: A randomized validation study in Malawi
Volume 54 - Article 41    | Keywords: data quality, excess mortality, HIV/AIDS, mortality, siblings, social desirability bias, surveys

Life expectancy in China and the contribution of regional dynamics
Volume 54 - Article 39    | Keywords: composition, decomposition, life expectancy, mortality

Bayesian multidimensional mortality reconstruction
Volume 54 - Article 28    | Keywords: Bayesian reconstruction, data lack, hierarchical modelling, mortality

Winter life expectancy reduction in Europe
Volume 54 - Article 26    | Keywords: Europe, excess winter deaths, excess winter mortality paradox, life expectancy, mortality, summer, weekly mortality data, winter

Bringing cause-of-death analysis into demography: An interview with France Meslé
Volume 54 - Article 24    | Keywords: causes of death, epidemiological transition, health transition, mortality, mortality data