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Issues in the economics of aging
82 process or by the lesser productivity of the East-German economy is not discussed, which would suggest that the imperfections of the health care system of the former G.D.R. may also exist in Western typm of National Health Services. Nevertheless, the book provides a good overview of different-m between both systems. The events at the end of 1989 and in the first half of 1990 had their own time scale. The speed of the unification process did not leave much time. The book is a promotor as well as a victim of this process. M. Schneider, Ph.D. Basys GmbH Augsburg, Germany
*****
Issue
in the Economics of
Aging
By A. ‘Mae (Ed.) Chicago, The University of Chicago Press. 394 pp., 1990 ISBN O-226-90297-8, f41.M This volume reports 11 papers presented at an NBER conference on the Economics of Aging’, organised in Arizona, U.S.A., in 1988. It covers new research relating to two specific issues concerning the elderly: housing and living conditions and labour market behavior (especially retirement). Since 11 contributions are included, not all of them can be discussed in detail. Hence this book review will be restricted to some of the most interesting, counterintuitive or promising findings, thereby inherently reflecting some subjectivity from the part of the referee. The Brst part of this volume relates to housing arrangements. Venti and Weise found that elderly U.S. citizens, on average, do not wish to reduce their housing equity. Furthermore the large transaction costs associated with moving do not seem to explain tbe average propensity to keep housing equity. This is certainly a point that deservm further attention, e.g., since there are some problems with the curren t model specifications, but so far the basic result seems quite robust. The major contribution of Ai et al. lies in their attempt to construct an acceptable indicator of the user cost of housing. Their approach seems very promising! B&sch-Supan reports a nmbcr of interesting characteristics of U.S. elderly housing habits, on the basis of a Markov model. The results conform with those obtained by Ellwood and Kane, whose coxmlusions am based on an exponential hazard model. One of their robust findings is the fact tbat institutionalisation is viewed as an inferior living arrangement, a finding, based on rigorous economic techniques, which ahould not be ignored in future policy decisions. Kotlikoff and Morris include income and preferences of the children of the elderly to explain elderly’s housing and living habits. Garber and MaCurdy design a model to predict nursing home utilisation. All in all, the first part of this book makes a nice attempt to further our understanding of housing decisions and arrangements among the elderly, recogniing that it is a very difiicult, complex problem (due to the consumption and investment component of housing, the high degree of uncertainty, . ..). which must bc@ltledVayCX&Illly. ‘The second part of the volume contains papers relating to labor market and retirement decisions. Stock and Wise attempt to explain the relationship between retirement patterns and benefit pension plans, on the baais of an option value model. Their model seems to work quite well. Hurd aims at determining the rate of correlation between husbands’ and wives’retirement dates and at explaining this correlation in terms of observable economic variables Bcrnbeim deals with the formation of expectations among the elderly, a problem that surely deserves further attention, not only for the aging population, but for all individuals. More precisely, he analyses how individuals incorporate new information in forming expectations about future events. This is a
83 research ana which should be high on our priority list, since most (if not all) economic analysis is baaed on the assumption of rational individuals. Laxear deals with the impact of demographic changes (i.e. the aging population) on future labour force policies within firma Rust finally focussea on the retirement behavior of men. This paper is the second in a series of three papers dealing with the subject, but dcea not yet report final conclusions. This volume is ncommcndcd for anybody (not only economists) interested in the problems of the elderly, especially because of the rich variety in methodology (model specifications and estimation techniques) and in available data sets that are used to come to grips with two issues specific for the elderly population. The papers contained in this volume obtain a number of interesting conclusions, which should be studied further and taken into account in designing government policies towards the elderly. Professor K. Kesteloot, Ph.D. School of Public Health University of Leuven Leuven, Belgium
*****
Funding Health Sciences Research. A Strategy to Restore Balance By the Committee on Policies for Allocating Health Sciences Research Funds of the Institute of Medicine Washington D.C., National Academy Press, 262 pp., 1990, ISBN O-309-04343-3, $27.95 In the last few yearn funding for health tience.s research in the United States has faced the paradox that despite the greatest Fedeml and private investment the probability that any new grant application will be funded has never been lower. Further, there is a recognition that important parts of the health research enterprise have beam neglected in order to keep thin gap from growing wider: health sciences as a career is now unattractive and in consequence the necessary cadre of well-trained scientists is threatened for the fuhue.; outmoded facilities and equipment are beginning to constrain creativity of current medical scientists; and those grants that are funded have nearly all suffad severe attrition adversely tiecting their e&tivenes.g and rimelincse. Apart from current funding difficulties, because of the perceived eerious impact of this situation in later years, in May 1988 the Institute of Medicine appointed a Committee of Policies for Allocating Health Sciencu~ Research Fun& to study theee problema and trends. The committee were asked to review the current policies of all sponsonr of health sciences restarch and to recommend appropriate revisions in th= in order to restore the balance of the essential componenta of health reaearch, namely rcseamh, training, equipment and facilities - and to ensure that the funds committed would be used in the most effect& manner to sustain the vitality of U.S. biomedical reaearch. Initially, the history of support for health sciences and the change to the predominance of federal funding over that of industry and private foundations is reviewed. The rapid growth in grants and their funding up to 1988 and the various policies pursued by governmen t and NIH to stab&e a system outgrowing its fimding are described. The Committee (not surprisingly) reach the conclusion that the moat crucial long-term investment is the development of career scientists. It make3 a number of recommendations, including a priority setting framework for the effective allocation of funds for short and longer term needs; and for the maintenance of owzall balance amongst research, people and facilities. An enlightened approach ia adopted by making these recommendationa within scenarios of varied percentage growth in health science research budgets. Fur&r, det&d recommendations - and justification for these - are concerne d with identification and training of scientists, ways of assessing progress, research management and in particular communication
*****
Issue
in the Economics of
Aging
By A. ‘Mae (Ed.) Chicago, The University of Chicago Press. 394 pp., 1990 ISBN O-226-90297-8, f41.M This volume reports 11 papers presented at an NBER conference on the Economics of Aging’, organised in Arizona, U.S.A., in 1988. It covers new research relating to two specific issues concerning the elderly: housing and living conditions and labour market behavior (especially retirement). Since 11 contributions are included, not all of them can be discussed in detail. Hence this book review will be restricted to some of the most interesting, counterintuitive or promising findings, thereby inherently reflecting some subjectivity from the part of the referee. The Brst part of this volume relates to housing arrangements. Venti and Weise found that elderly U.S. citizens, on average, do not wish to reduce their housing equity. Furthermore the large transaction costs associated with moving do not seem to explain tbe average propensity to keep housing equity. This is certainly a point that deservm further attention, e.g., since there are some problems with the curren t model specifications, but so far the basic result seems quite robust. The major contribution of Ai et al. lies in their attempt to construct an acceptable indicator of the user cost of housing. Their approach seems very promising! B&sch-Supan reports a nmbcr of interesting characteristics of U.S. elderly housing habits, on the basis of a Markov model. The results conform with those obtained by Ellwood and Kane, whose coxmlusions am based on an exponential hazard model. One of their robust findings is the fact tbat institutionalisation is viewed as an inferior living arrangement, a finding, based on rigorous economic techniques, which ahould not be ignored in future policy decisions. Kotlikoff and Morris include income and preferences of the children of the elderly to explain elderly’s housing and living habits. Garber and MaCurdy design a model to predict nursing home utilisation. All in all, the first part of this book makes a nice attempt to further our understanding of housing decisions and arrangements among the elderly, recogniing that it is a very difiicult, complex problem (due to the consumption and investment component of housing, the high degree of uncertainty, . ..). which must bc@ltledVayCX&Illly. ‘The second part of the volume contains papers relating to labor market and retirement decisions. Stock and Wise attempt to explain the relationship between retirement patterns and benefit pension plans, on the baais of an option value model. Their model seems to work quite well. Hurd aims at determining the rate of correlation between husbands’ and wives’retirement dates and at explaining this correlation in terms of observable economic variables Bcrnbeim deals with the formation of expectations among the elderly, a problem that surely deserves further attention, not only for the aging population, but for all individuals. More precisely, he analyses how individuals incorporate new information in forming expectations about future events. This is a
83 research ana which should be high on our priority list, since most (if not all) economic analysis is baaed on the assumption of rational individuals. Laxear deals with the impact of demographic changes (i.e. the aging population) on future labour force policies within firma Rust finally focussea on the retirement behavior of men. This paper is the second in a series of three papers dealing with the subject, but dcea not yet report final conclusions. This volume is ncommcndcd for anybody (not only economists) interested in the problems of the elderly, especially because of the rich variety in methodology (model specifications and estimation techniques) and in available data sets that are used to come to grips with two issues specific for the elderly population. The papers contained in this volume obtain a number of interesting conclusions, which should be studied further and taken into account in designing government policies towards the elderly. Professor K. Kesteloot, Ph.D. School of Public Health University of Leuven Leuven, Belgium
*****
Funding Health Sciences Research. A Strategy to Restore Balance By the Committee on Policies for Allocating Health Sciences Research Funds of the Institute of Medicine Washington D.C., National Academy Press, 262 pp., 1990, ISBN O-309-04343-3, $27.95 In the last few yearn funding for health tience.s research in the United States has faced the paradox that despite the greatest Fedeml and private investment the probability that any new grant application will be funded has never been lower. Further, there is a recognition that important parts of the health research enterprise have beam neglected in order to keep thin gap from growing wider: health sciences as a career is now unattractive and in consequence the necessary cadre of well-trained scientists is threatened for the fuhue.; outmoded facilities and equipment are beginning to constrain creativity of current medical scientists; and those grants that are funded have nearly all suffad severe attrition adversely tiecting their e&tivenes.g and rimelincse. Apart from current funding difficulties, because of the perceived eerious impact of this situation in later years, in May 1988 the Institute of Medicine appointed a Committee of Policies for Allocating Health Sciencu~ Research Fun& to study theee problema and trends. The committee were asked to review the current policies of all sponsonr of health sciences restarch and to recommend appropriate revisions in th= in order to restore the balance of the essential componenta of health reaearch, namely rcseamh, training, equipment and facilities - and to ensure that the funds committed would be used in the most effect& manner to sustain the vitality of U.S. biomedical reaearch. Initially, the history of support for health sciences and the change to the predominance of federal funding over that of industry and private foundations is reviewed. The rapid growth in grants and their funding up to 1988 and the various policies pursued by governmen t and NIH to stab&e a system outgrowing its fimding are described. The Committee (not surprisingly) reach the conclusion that the moat crucial long-term investment is the development of career scientists. It make3 a number of recommendations, including a priority setting framework for the effective allocation of funds for short and longer term needs; and for the maintenance of owzall balance amongst research, people and facilities. An enlightened approach ia adopted by making these recommendationa within scenarios of varied percentage growth in health science research budgets. Fur&r, det&d recommendations - and justification for these - are concerne d with identification and training of scientists, ways of assessing progress, research management and in particular communication