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Index A Academic centers, 170- 172 Administrative costs, 34 Administrative records aggregate comparisons of surveys with, 128 employer data, 123- 124 household survey reports compared with, 129-130 individual data, 121- 123 linkage with other data collections, 6 microlevel comparisons of surveys with, 128-129 nonsampling errors in, 125 recommendations for, 6, 124 role of, 120-121 trade-offs in data collection, 69-70 Age of retirement application for pension benefits, 49 determinants, 50 implications for retirement income security, 24 mandatory, 43 predictive modeling, 50 Social Security system provisions, 26 trends, 24 Agency for Health Care Policy and Research, 62 233 AHEAD. See Asset and Health Dynamics Among the Oldest Old Analytical models consumption-saving motivations, 46 data collection for, 70 labor-leisure choices, 51 need for, 41, 57 research needs, 51 role of, 15, 132 Asset and Health Dynamics Among the Oldest Old (AHEAD), 5, 7, 168 contributions of, 48, 54, 88, 170-171 cross-survey reviews, 95 databases, 88-89 design and management of, 170- 171 on expenditures, 94 family asset surveys, 93 future prospects, 91 -92, 180- 181 goals, 48, 57, 88, 180 incorporating employer survey in, 116 119 linkage with administrative data, 5, 122 123 matched S SA files, 122- 123 medical cost data, 57 opportunities for validation studies, 130 participants, 88, 180 recommendations for, 5, 96, 120 time horizons, 151 - 152

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234 use of data in microsimulations, 143, 145-146, 151-152 B Bankruptcy modeling, 138- 139 Bootstrapping, 154 Bureau of Labor Statistics, 110, 116, 167 See also Employee Benefits Survey C Cell-based models, 15, 133-134, 139, 141, 142 current systems, 196- 197 Census Bureau, 45, 53, 116, 121, 158, 167 access to confidential data of, 123-124, 129 longitudinal research database, 101- 102 Computable general equilibrium models, 15, 135 current systems, 139, 197-198 Confidentiality, 6, 121, 122, 123, 124, 129 Congressional Budget Office modeling strategies, 160- 162 Consumer Expenditure Survey, 90-91, 187- 188 Consumption after retirement, 47 criteria for policy evaluation, 33 data sources, 48, 90-91 life-cycle models, 46 panel survey data, 92-93, 94 projection modeling, 49 research needs, 4, 47, 58-59 CORSIM, 143n., 193-194 Cost-benefit analysis, 15- 16 Cost of health care cross-sectional survey of expenditures, 189 current policy concerns, 2 drivers of, 56 future prospects, 23, 25 microsimulations, 147 near-term policy options, 30-31 obstacles to projective modeling, 56 out-of-pocket expenditures, 23 projection modeling, 30 research needs, 4 significance of, for retirement income security, 12, 56 INDEX spending patterns, 56-57 trends, 23-24 Cost-of-living adjustment, 39 Current Population Survey (CPS), 49, 90, 121, 128, 129, 130, 145, 149, 168, 188-189, 200, 209, 210 D Data collection(s) administrative records, 6, 69-70, 120-124 for analytical modeling, 70 bootstrapping, 154 confidentiality issues, 6, 121, 122, 123, 124, 129 consumption-savings behaviors, 48 cost of health care, 56 cross-sectional surveys, 71, 187- 189 cross-survey reviews, 95 current organizational structure, 165- 166 deficiencies in, 3, 4, 41, 57, 61, 63-64, 96-97 on demand for older workers, 114-115, 120 designs for, 65-68 on employer benefits, 111- 114 employer data task force, 167- 168 employer-related data, 5-6, 44-45, 96 103, 110-111 evaluation of data quality, 6, 131 exact-matched data files, 6, 121 - 124, 128-129 forum working group on data quality, 169 future directions, 91-95, 110-111 health care reform experience, 62-63 on health/disability status, 55-56 importance of validation, 124- 125, 153 on individual behavior, 4-5 interagency collaboration for, 6-7, 96, 119, 124, 166-167 on labor supply, 49 methods of validation, 125- 129 microlevel comparison of data files, 128 129 for microsimulations, 143- 144, 149- 152 on mortality rates, 52 nonsampling errors, 125 organizational problems, 166 panel survey review group, 168- 169 participants, 165

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INDEX planning for, 97 on population size/composition, 52-53 priorities, 97 private sector participation, 170- 171 problems with employer surveys, 107 110 projection modeling needs, 2-3, 8-9, 70, 132, 141 recommendations for, 3, 5-6, 7, 119-120, 131, 170, 172 reinterviewing, 125 resource allocation for, 3, 5, 62 role in policy formulation, 2 sampling errors, 154 survey aggregate comparison, 127-128 trade-offs, 68-70 unified budget for, 166 validation needs, 129- 131 wording for survey questions, 125-127 See also Panel surveys Demand for older workers, 4, 5, 6 case studies for researching, 114-115 company size related to, 43 data sources, 45 determinants of, 43 projection modeling, 8 research needs, 58, 120 significance of, 42 Demographic processes implications for retirement income security, 10, 24 implications for Social Security system, 20 labor force participation, 24 research needs, 4 significance of, for projection modeling, 40-41 Demographic variables cross-sectional surveys, 187- 189 goals for projection modeling, 7 heterogeneity of projection models, 35-36 in microsimulation models, 142 in mortality, 53 in mortality models, 163 n. population size/composition, 52-53 research needs, 59-60 uncertainty estimates, 158-159 See also Demographic processes Disability insurance future prospects, 20 linkage to Social Security benefit design, 27, 35 235 microsimulation models, 161 - 162 trends, 25 Dynamic Simulation of Income Model (DYNASIM) 2, 134, 140, 143, 145, 146, 149 characteristics, 194, 199-200 documentation, 199-200 limitations, 211-212 operation, 200-207 opportunities for improvement, 162 pension components, 207-209 DYNASIM 2. See Dynamic Simulation of Income Model EEarly retirement data needs, 5 labor market distortions, 32 Economic shocks, 8, 26 Employee Benefits Survey, 5, 44, 97-100, 111, 112, 119-120, 168 Employer behavior administrative data, 123- 124 analytical models for, 15, 44 benefit offerings, data collection on, 111 114 criteria for policy evaluation, 33-34 current knowledge base, 40, 41, 44-45 data collection task force, 167- 168 data needs, 5-6, 44, 45, 119 data sources, 96- 103, 190- 192 demand for older workers, 43 determinants of, 42 development goals for modeling, 140-142 future directions for data collection, 110 111 microsimulation models, 134- 135 motivation for sponsoring pension plan, 42-43 obstacles to data collection, 107- 110 panel survey design, 115- 119, 120 pension plan design, 42-43 pension plan policies directed at, 28-29 pension sponsorship rate, 21 proj ection modeling, 8, 138 - 139 recommendations for data collection, 5-6, 119-120 recommendations for projection modeling, 9, 142 research needs, 3-4, 37, 58

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236 significance of, for retirement income system, 42 tax policy effects, 7-8 Employer Benefits Survey, 190 Employer-provided health insurance data sources, 102-103 participation, 24 surveys, 192 trends, 24 Employment Cost Trends Survey, 112, 190 Employment Retirement Income Security Act, 12 Ex post forecasting, 154 Expectations of workers, 72 F Families data sources, 48 kinship networks, 54 microsimulation models, 142- 144 panel surveys, 185- 187 research needs, 4 Federal Committee on Statistical Methodology, 166- 167, 169 Form 5500 database, 5, 44, 100-101, 111, 112-113, 120, 122, 146, 168, 190- 191, 210 401 (k) plans, 21, 46 employer motivation for sponsoring, 43 policy options, 28 H Health and Human Services, Department of, 166, 167 National Employer Health Insurance Survey, 44 Health and Retirement Survey (HRS), 5, 7, 168 contributions of, 48, 54, 88 cross-survey reviews, 95 databases, 88-89 design and management of, 170- 171 on expenditures, 94 family asset surveys, 93 future prospects, 91-92 goals, 48, 51, 57, 88, 181 on health care use, 84 on health status, 82 INDEX incorporating employer survey in, 116- 119 on individual assets/expenditures, 85, 86- 87 linkage with administrative data, 5 matched S SA files, 122- 123 medical cost data, 57 participants, 88, 181 on pension coverage/benefits, 80, 81 recommendations for, 5, 96, 120 retirement-related expectations, 78-79 time horizons, 151 - 152 use of data in microsimulations, 143, 145-146, 151-152 validation needs, 129, 130 Health care reform modeling techniques, 62 near-term policy options, 30-31 obstacles to assessing proposals, 1, 2, 11, 62-63 Health/disability status obstacles to data collection, 55 panel survey findings, 72 research needs, 60 significance of, for retirement income system, 55 trends, 55-56 Health Insurance Portability and Accountability Act of 1996, 30 n. Home equity, 23, 47, 48 HRS. See Health and Retirement Survey I Immigration/emigration, 25 research needs, 4 significance of, for demographic modeling, 52 Individual behavior age profile of workforce, 44 analytical models for, 15 complex models, 51 criteria for policy evaluation, 32-33 current knowledge base, 40, 41 data needs for analytical modeling, 70 labor-leisure choices, 32-33, 49-51 microsimulation models, 142- 144, 147, 148-149 panel surveys, 51, 70-71, 115- 119 pension plan participation, 13, 21, 25 projection modeling, 139-140

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INDEX projection modeling goals, 8 reduced-form models, 50 research needs, 3-4, 37, 48, 59, 70 significance of, for projection modeling, 39-40 structural models, 50-51 tax policy effects, 7-8 time horizon for policy effects, 36 time horizon for study of, 70 See also Consumption; Savings behavior Individual Retirement Accounts, 2, 46 incentives to increase contributions to, 13, 26, 29 policy issues, 13 substitutability of contributions, 47 Inflation indexation, 19, 39-40 Inherited assets, 30 Interagency Forum on Aging-Related Statistics, 7, 167, 169 Intergenerational transfers, 32 models for, 197- 198 Internal Revenue Service, 121 L Labor, Department of, 2, 3, 8, 141, 152, 167 recommendations for, 5, 119, 142 Labor supply. See Demand for older workers; Workforce participation Life expectancy, 24 Long-range forecasting, 36-37 behavioral responses, 39-40 ex post, 154 microsimulation models for, 142 Long-term care, 184 individual spending for, 30 Longitudinal Research Database, 191 - 192 Longitudinal Study of Aging, 181 M Macroeconomic-Demographic Model, 133, 196 Macroeconomics microsimulation inputs for modeling, 148 outcomes of policies affecting employers, 33-34 policy, 12 projection models, 15, 135 Managed care, 25 237 Marital status economic status of elderly and, 53-54 as mortality variable, 53 research needs, 4, 54 Medicaid, 2, 12 exact-matched records, 124 health care spending, 23-24 Medical Expenditure Panel Survey, 189 Medical savings accounts, 26 Medicare, 2, 12, 189 exact-matched records, 124 future prospects, 20 goals for projection modeling, 7 health care spending, 23-24 individual retirement decisions and, 50 policy options, 31 record quality, 128 Medicare Current Beneficiary Survey, 181- 182 Micro simulation s advantages, 134 aggregate projections, 148 aging techniques, 134 applications, 142 available systems, 142- 143 behavioral interactions in, 147 current systems, 138-140, 193-196 data sources, 134, 143, 149-152 design considerations for new systems, 152 development goals for new systems, 143- 149 dynamic qualities, 145 employer-based, 8, 134-135, 146 health care coverage in, 147 individual-level, 8 interaction with other models, 147- 149 methodology, 134 projection capabilities, 145-147 recommendations for, 9, 153 role of, 15 savings behavior in, 146- 147 SSA disability insurance modeling, 161- 162 types of, 134 Middle-aged people, 5 consumption-savings behavior, 46 data collection needs, 96 panel survey data, 72-88 personal savings trends, 47

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238 Model for Simulating Life Histories of the Elderly, 195- 196 Mortality data from administrative records, 121 demographic variables, 53 demographic variables in models of, 163n. microsimulation models, 145 projection modeling, 52-53, 156-157, 163 research needs, 4 significance of, for demographic modeling, 52 socioeconomic variables, 53 SSA projections, 156-157, 163 uncertainty in projections of, 157 N National Center for Health Statistics, 167 National Death Index, 124 National Employer Health Insurance Survey (NEHIS), 102, 111, 113-114, 168, 192 National Income and Product Accounts (NIPA), 128 National Institute on Aging, 2, 10, 167, 168- 169 recommendations for, 5 National Long-Term Care Survey, 184 National Longitudinal Survey of Mature Women, 79, 80, 81, 82, 85, 87, 92, 182 National Longitudinal Survey of Older Men, 182 National Longitudinal Survey of Young Men, 72, 183 National Longitudinal Survey of Young Women, 72, 81, 82, 84, 86, 87, 92, 94, 183 National Longitudinal Survey of Youth, 81, 84, 86, 87, 92, 96, 169, 183-184 National Longitudinal Surveys of Labor Market Experience (NLS), 72, 92, 93- 94, 95, 168-169 National Medical Expenditure Survey, 56, 57, 62 National Medicare Expenditure Survey, 189 National Survey of Families and Households, 54, 185- 186 New Beneficiary Followup, 185 New Beneficiary Survey, 185 INDEX o Office of Management and Budget, 166, 167 Old-Age, Survivors, and Disability Insurance, 20 Outcome criteria, 31-34 p Panel Study of Income Dynamics (PSID), 88, 93-94, 145, 150, 169, 186 Panel surveys advantages, 70-71 asset valuation, 93 for behavioral modeling, 51 for cohorts of individuals, 180- 185 consumption/savings behaviors, 92-94 cost of health care, 56-57 cross-survey reviews, 95, 96 employee-employer study, 115- 119 on employer behavior, 5, 120 employer behavior data, 45 expense, 71 of families and households, 185- 187 features/findings of, 72-89 future prospects, 91-92 health/disability status, 55-56 for microsimulations, 151 - 152 nonsampling errors in, 125 recommendations for, 5, 96 research needs, 97 review group, 168- 169 role of, 2 vs. cross-sectional surveys, 71 Pension and Retirement Income Simulation Model (PRISM), 134, 140, 143, 145, 146, 149 characteristics, 195, 199-200 documentation, 199-200 limitations, 211-212 operation, 200-207 opportunities for improvement, 162 pension components, 209-210 Pension and Welfare Benefits Administration (PWBA), 10, 110, 112-113, 162, 167 Pension Benefit Guaranty Corporation (PBGC), 2, 10, 32, 36, 110, 138-139 Pension Insurance Management System (PIMS), 138, 139, 194 Pension plans age at application for benefits, 49

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INDEX benefit design in microsimulation models, 146 current policy concerns, 1 data needs, 119-120 data sources, 44-45, 89-90, 97-101, 102, 122-123, 188-192 defined contribution plans, 21-22 definition of coverage, 17 distribution of returns, 41 early withdrawal, 28 employer motivation for sponsoring, 42- 43 future prospects, 21 interaction with other retirement programs, 35, 142 lump-sum payments, 22 mandatory withdrawal, 28 near-term policy options, 27-29 need for benefit design surveys, 111 - 114 outcome criteria for policy evaluation, 32 panel survey findings, 72 participation, 13, 19, 20-21 policy issues, 13 prefunding restrictions, 33 projection modeling, 207-210 Social Security linkages, 29 sponsorship rate, 21 tax policy, 28-29 trends, 20-22 types of, 21-22 PIMS. See Pension Insurance Management System Population-based models. See Cell-based models Population growth projection modeling, 156- 157 research needs, 4 Poverty rate as outcome criteria for policy evaluation, 31 risk for elderly, 54 significance of, l9n. trends, 18-19 PRISM. See Pension and Retirement Income Simulation Model Private sector, 170-172 Privatization of social security goals, 27 obstacles to modeling, 63-64 policy issues, 13- 14 Productivity, 41, 102 age-related data, 114 239 Projection modeling analytical modeling and, 15, 57, 132 application of validation techniques in, 155-156 best professional judgment for, 155-156 challenges to, 34-38 complex behavioral model, 51 in Congressional Budget Office, 160-162 cost of health care, 56 current systems, 138- 140 data needs for, 2-3, 8-9, 57, 61, 70, 141 deficiencies of, 132 development costs, 137 development goals, 140 differential risk in, 36 distributional analysis, 162- 163, 164 documentation for, 137- 138 of employer behaviors, 8, 138- 139, 140 142 ex post forecasting, 154 for executive branch, 161 goals for, 7-9 health care system, 30 heterogeneity of, 34-35 importance of validation for, 153 of individual behaviors, 37, 139-140 interagency collaboration for, 169-170 large-scale individual-level microsimulation, 8, 9 limitations of, 61 long-range forecasting, 36-37 long-term goals, 8 methods of validation for, 153-155 mix of employer types, 44 mortality rate in, 52-53, 156-157, 163 near-term strategies, 159- 160 opportunities to improve existing models, 162-163 performance evaluation criteria, 135- 138 policy outcome evaluation, 34 private sector participation, 170, 171-172 probabilistic methods, 158, 164 program interaction effects, 34-35, 142 recommendations for, 9, 142, 159, 163 164, 172 role of, 2, 15, 132 savings-consumption behavior in, 49 sensitivity analysis, 154- 155, 156, 159 significance of behavioral variables for, 39-40 significance of demographic process variables for, 40-41

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240 SSA models, 161-164 SSA validation techniques, 156-159 types of, 15, 133-135 uncertainty effects, 8, 38, 154-155 validation of databases for, 124, 153 Public Pension Coordinating Council, 103, 111 Public policy cost-benefit analysis, 15- 16 current concerns, 1 -2, 12- 14 current government agency responsibility, 12, 165- 166 data and research needs, 57-60, 61-62 identifying uncertainty measures for, 8, 38, 155 near-term modeling strategies for, 159-160 near-term options, 25-26 options for health care, 30-31 options for influencing personal savings, 29-30 options for pension plans, 27-29 options for Social Security, 26-27 outcome evaluation for, 31-34 pension regulation issues, 13 personal saving issues, 13, 23 policy question formulation, 159 program interactions, 34-35 research needs, 3-4, 11 Social Security system issues, 13-14 structural models for, 51 tools for, 2 R Reduced-form models, 50 Regulatory environment pension funds, 13 retirement security issues, 12 Research current organizational structure for, 165- 166 need for, 3-4, 41 priorities, 57-60 role of, 2 Retirement Health Survey, 185 Retirement History Survey, 49, 72, 79, 81, 84, 86, 87, 145, 185 Retirement income assessment of security of, 11-12 current government policymaking structure, 12 INDEX current policy concerns, 1 -2, 10, 12- 14 current status, 17- 19 determinants of security, 39 future challenges, 17, 19-20, 25 implications of health care cost trends, 23-24 near-term policy options, 25-26 obstacles to modeling, 3 outcome criteria for policy evaluation, 31-34 panel surveys, 72-89 personal savings for, 23 policy areas affecting, 12 sources of, 12 threats to, 12 trends, 17 S Savings behavior bequest motives, 46 criteria for policy evaluation, 32, 33 current practice, 23 decision-making models, 46 investment vehicles, 46 life-cycle model, 46 microsimulation modeling, 146- 147 near-term policy options, 29-30 panel survey data, 72, 92, 93, 94 policy issues, 23 precautionary motives, 46 projection modeling, 49 proposals to stimulate, 26 rate of return issues, 47-48 research needs, 4, 46-47, 48, 58-59 significance of, for policymaking, 26 tax incentives, 13 trends, 47 Schieber and Shoven Model, 196 Sensitivity analysis, 154- 155, 156, 159, 164 Small businesses incentives for pension plan development, 26 obstacles to pension plan development in, 42-43 pension regulation, 13 Social Security Administration (SSA), 2, 10, 152 actuarial proj ections, 196- 197 administrative records, 121- 123, 163 model validation in, 156-159

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INDEX projection modeling, 161-163, 164, 196- 197 recommendations for, 164 research access to models, 163, 164 Social Security system, 12 actuarial balance, 32 actuarial projections, 52, 134, 156 administrative costs, 34 benefit formula, 27n. current policy concerns, 1, 10, 13-14, 20 current status, 19 disability insurance linkage, 27, 35 exact-matched data files, 121- 123, 124, 129, 149-150 future prospects, 20, 25 goals for projection modeling, 7 indexation, 19, 39-40 individual retirement decisions and, 50 interaction with other retirement programs, 35, 142 leakage, 34 near-term policy options, 26-27 opting out, 29 outcome criteria for policy evaluation, 32 pension plan design linked to, 29 privatization, 13-14, 27, 63-64 projection models, 139 transgenerational transfers, 32 worker confidence in, 27 See also Social Security Administration Socioeconomic status current retiree population, 19 as mortality variable, 53 Solvency and Individual Retirement model, 139 Solvency and Individual Return model, 196 SSASIM, 139, 157-158, 197 Statistics Canada, 116 Stochastic simulations, 157- 159 Structural models, 50-51 Supplemental Security Income, 12 Survey of Consumer Finances (SCF), 89, 91, 95, 128, 169, 189 Survey of Income and Program Participation (SIPP), 89-90, 91, 95, 121, 122-123, 128, 129, 130, 169 design and goals, 186- 187 future prospects, 187 for microsimulations, 150- 151 pension data, 168 Survey of Private Pension Benefit Amounts, 121-122 241 T Tax policy goals for projection modeling, 7-8 intervention for Social Security system, 26-27 pension plan options, 28-29 personal savings incentives, 13 retirement security issues, 12 transgenerational equity, 32 Technology, health care, 56 TIAA-CREF, 2, 10 Time-series models, 15, 133 Treasury Individual Income Tax Simulation Model (OTA Model), 195 U Uncertainty effects mortality projections, 53, 157 policymakers understanding/acceptance of, 8, 38, 155 recommendations for modeling, 159 in SSA projections, 157-159, 164 stochastic methods for estimating, 157- 159 trade-offs in data collection, 68 validation for projection models to minimize, 154- 155 Unionized workers mandatory retirement age, 43 pension plan offerings for, 42 U.S. Establishment and Enterprise Microdata (USEEM) File, 102- 103 W Window plans, 50, 81, 101 Women labor force participation, 24 poverty risk for elderly, 53-54 Worker-Establishment Characteristics Database, 191 - 192 Workforce participation company size and, trends in, 44 data sources, 49, 51, 90 demographic trends, 24 disability rate and, 24-25 labor market distortions in policy, 32 life-cycle patterns, 49-50 microsimulation models, 134, 145, 148 panel surveys, 72

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