Unobserved Population Heterogeneity and Dynamics of Health Disparities

A growing body of literature has reported widening educational health disparities across birth cohorts or time periods in the United States, but has paid little attention to the implication of mortality selection on the cohort trend in health disparities.

This study investigates how changes in the variance of unobserved frailty over time may complicate the interpretation of cohort trends in health disparities and life expectancy.

We use the microsimulation method to test the effect of mortality selection and further propose a counterfactual simulation procedure to estimate its contribution. Data used in the simulations are based on Panel Studies of Income Dynamics 1968-2013, National Health and Nutrition Examination Survey data 1999-2012, and National Health Interview Survey data 1986-2011.

Simulation shows that mortality selection may generate seemingly contradictory trends in health disparities and life expectancy across birth cohorts at the group and individual level. Life expectancy can change even when individual mortality curve is fixed. In the absence of a change in the causal effect of education on mortality at the individual level, an educational life expectancy gap can change across cohorts as a result of the change in frailty variance. Empirical analysis shows that mortality selection accounts for a sizeable amount of contribution to the widening educational life expectancy gap from the 1950s to 1960s birth cohorts in the United States.

We demonstrate mortality selection can complicate the cohort trend in health disparities and life expectancy and propose a counterfactual simulation method to evaluate its contribution.