Is Posner right? An empirical test of the Posner argument for transferring health spending from old women to old men

Abstract

Posner (Aging and old age, University of Chicago Press, Chicago, 1995) proposes the redistribution of health spending from old women to old men to equalize life expectancy. His argument is based on the assumption that the woman’s utility is higher if her husband is alive. Using self-reported satisfaction measures from a long-running German panel survey, the Socio-Economic Panel Study (SOEP), the present study conducts an empirical test of this assumption and investigates the question of whether and to what extent widowed women’s utility responds to her spouse’s death. We apply a combination of propensity score matching and parametric regression techniques. Our results reveal satisfaction trajectories of women who experience the death of their spouse and identifies the causal effect of widowhood. The average level of satisfaction in a control group of non-widowed women serves as a reference to measure the degree of adaptation to widowhood. The results suggest bereavement has no enduring effect on satisfaction, and that is evidence against Posner’s assumption. We conclude that elderly women would not benefit from Posners policy proposal.