Essays on Well-Being, Old-Age Pensions, and Health

Abstract

In anticipation of population aging, governments are implementing policies that seek to improve elderly well‑being and protect them from financial hardship. This dissertation begins by evaluating the health effects of two popular pension reforms in Latin America- privatization of social security and non‑contributory pensions. In the first essay, I evaluate the effect of social security privatization on survival. Using initial fund selection as an instrumental variable for pension wealth at legal retirement age, I find that increases in pension wealth reduce old age mortality and lead to large differences in life expectancy across income quintiles. In the second essay, I study the impact of a non‑contributory pension program on health care utilization patterns and find that receiving cash transfer pensions increases overall health care utilization, but more importantly leads to a shift from low‑quality to high‑quality services. Despite increased utilization, there is no evidence of higher expenditures, which can be partially explained by the increased uptake of public health insurance by those receiving non‑contributory pensions. The first two essays exemplify the link that exists between economic well‑being and health, a relationship that has been made explicit in the international agenda with the Sustainable Development Goals. Nevertheless, there are few national welfare measures that combine household‑level economic well‑being and longevity. The last essay develops a proof of concept measure adjusting quality of life for poverty, that is analogous and complementary to the Disability‑Free Life Expectancy index. The proposed index, Poverty‑Free Life Expectancy, estimates the average years an individual can expect to live out of poverty and ranges considerably across countries with females losing larger shares of life than males, offsetting the gender gap in life expectancy. This essay shows that, as household data becomes increasingly available in the developing world, more precise measures of quality of life should be be desisgned and adopted to guide policy making.