The Economic Well-Being of the Elderly: A Dominance Approach

Recent advances in the evaluation of the economic well-being are applied to assess the status of elderly Americans in the 1980s and 1990s. Micro data for the elderly and nonelderly populations are analyzed using stochastic dominance. A distinguishing feature of the research is that it goes beyond simple summary statistics and tests hypotheses concerning the economic well-being of the elderly. We find that summary measures of well-being applied to the elderly are often deceiving; very similar means mask important differences in the entire distributions. Elderly incomes are smaller than the nonelderly in the middle income levels and larger at the top and bottom of the income scale. Using the dominance method to evaluate economic well-being suggests that the elderly now enjoy a higher level of economic well-being than the nonelderly.