Deadly Mistakes: Differences in the Formation and Accuracy of Longevity Expectations by Education and Cognition

Mistaken expectations of longevity will lead to suboptimal investments in health. If the lower educated are more likely to commit such errors, this could contribute to the differences in health behavior that appear to be partly responsible for the strong education disparity in health. Analysis of eight waves of US Health and Retirement Study data using discrete time duration models reveals that lower educated individuals hold longevity expectations that are less accurate in predicting actual mortality. But this is largely because the less educated, on average, have lower cognitive functioning, which impairs the accuracy of reported expectations. Estimates from a dynamic panel model of the expectations data indicate that an important reason for the education/cognition gradient in the veracity of expectations is that individuals of lower educational attainment are less likely to revise survival expectations downward in response to new information on objective risks, such as the onset of cancer or the occurrence of a stroke. These systematic biases in the formation of survival expectations suggest that the less educated may be making sub-optimal decisions not only regarding their finances, but also with respect to preventive care, curative care and lifestyle. Education disparities in health may partly arise from differential ability to perceive health risks.