A scary link between life spans and income inequality

The gap in expected life spans between low and high U.S. wage earners has been growing in recent decades. This finding, in a recent study from the prestigious National Academy of Sciences, is sure to add fuel to the debate over the impact of growing income inequality in America and will likely have policy implications for popular public programs such as Social Security and Medicare.

The study examined two groups of 50-year-olds: those born in 1930, and those born in 1960. As shown below, in recent decades, males in the bottom fifth of lifetime earnings experienced a decrease of about half a year in life expectancy.

Remaining life expectancy of 50-year-old males in bottom fifth in lifetime earnings:

  • Born in 1930: 26.6 years
  • Born in 1960: 26.1 years

The story is very different for 50-year-old males in the top fifth of lifetime earnings because they gained seven additional years in life expectancy.

Remaining life expectancy of 50-year-old males in top fifth in lifetime earnings:

  • Born in 1930: 31.7 years
  • Born in 1960: 38.8 years

For males born in 1930, the gap at age 50 between the bottom fifth and top fifth of lifetime earnings was 5.1 years. For males born in 1960, this gap increased to 12.7 years.

For females, the life expectancy gap is even more pronounced. The bottom fifth in lifetime earnings lost four years in life expectancy in recent decades.

Remaining life expectancy of 50-year-old females in bottom fifth in lifetime earnings:

  • Born in 1930: 32.3 years
  • Born in 1960: 28.3 years

Once again, the story is very different for 50-year-old females in the top fifth of lifetime earnings. They gained almost six years in life expectancy.

Remaining life expectancy of 50-year-old females in top fifth in lifetime earnings:

  • Born in 1930: 36.2 years
  • Born in 1960: 41.9 years

For females born in 1930, the gap in remaining life expectancy at age 50 between the bottom fifth and top fifth of lifetime earners was 3.9 years. For females born in 1960, this gap increased to 13.6 years.

The National Academy of Sciences study also looked at life expectancies for the second, third and fourth quintiles of lifetime earnings, and the results generally fell between the results of the bottom and top quintiles. That means each successive quintile of lifetime earnings had higher remaining life expectancies than the preceding quintile, for both of the groups born in 1930 and in 1960.

One startling result was that for females, only the top quintile of earners experienced life expectancy gains in recent decades. This means the bottom 80 percent are projected to experience decreases or no gains in life expectancies when comparing the 1930 and 1960 birth groups. The study cautions that life expectancy estimates are less reliable for females than males.

The National Academy of Sciences study contains an important caveat: All the reported life expectancies are estimates based on projections from current mortality trends. We won't yet know the actual lifespans for either the 1930 and 1960 birth groups until all of them have lived out their lives. Actual future experience could differ from these life expectancy projections.

The National Academy of Sciences report summarizes the extensive research literature that analyzes differences in life expectancies by various demographic groups, and it attempts to identify the underlying causes for differences in life expectancies. Various studies report a widening gap in life expectancies whether measured by differences in educational attainment, lifetime earnings or the economic strength of the geographic area in which people live.

The prevailing view among researchers is that the longevity disparities originate, in part, in early childhood and, in part, from health-related behaviors and outcomes that spread out over an individual's life span. One report found that differences in smoking and obesity account for a large share of the differences in disparities across different social-economic status groups. Another study reported that smoking-related deaths account for 60 percent of the U.S. mortality differences across states.

The research hasn't established conclusively whether income inequality by itself is bad for the health of people with lower incomes, or if the disparities in projected life expectancies are due to an overall picture that includes differences in education, socio-economic status, availability of medical care, access to healthy food and the economic strength of the area in which people live.

The National Academy of Sciences report is sure to influence the debate on possible future changes to Social Security and Medicare when policymakers consider how to balance benefits received with taxes paid by various demographic groups. One potential change: Policymakers may try to protect the most vulnerable in the population while reducing future benefits paid to people who are deemed to be the most healthy and capable.

The report raises an important question: How can our society extend recent improvements in lifespans to all citizens?

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.