Roozbeh Hosseini, Karen A. Kopecky, and Kai Zhao
Working Paper 2019-12a
June 2019 (Revised March 2021)

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We construct a unified objective measure of health status: the frailty index, defined as the cumulative sum of all adverse health indicators observed for an individual. Using the frailty index, we document four stylized facts on health dynamics over the life cycle. We show that the facts are robust to several alternative approaches to the construction of the index. We also compare the frailty index with self-reported health status and find significant differences in their dynamics and ability to predict health-related outcomes. Finally, we propose and estimate a stochastic process for frailty dynamics over the life cycle accounting for mortality bias. Researchers can use our frailty measure and dynamic process to study the evolution of health over the life cycle and its economic implications.

JEL classification: I10, I14, C33

Key words: health, frailty index, self-reported health status, mortality, simulated method of moments

The authors thank Mariacristina DeNardi and four referees for helpful feedback. They also thank Jordan Herring for outstanding research assistance and Toni Braun, Jesus Bueren, Eric French, John Jones, Melinda Pitts, and Dan Waggoner for insightful comments and suggestions. We also benefited from comments received at the 2018 Midwest Macro Meetings, the 2018 Society for Economic Dynamics, the 2018 Michigan Retirement Research Center Workshop and seminar participants at the Federal Reserve Bank of Atlanta and the University of Georgia. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System.

Please address questions regarding content to Roozbeh Hosseini, University of Georgia/Federal Reserve Bank of Atlanta; Karen A. Kopecky, Federal Reserve Bank of Atlanta/Emory University; or Kai Zhao, University of Connecticut.

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