Self-Reported vs. Objective Measures of Health in Retirement Models

Labor supply estimates are sensitive to the measures of health used. When self reported measures are used health seems to playa larger role and economic factors a smaller one than when more objective measures are used" While most authors have interpreted these results as an indication of the biases inherent in using self-reported measures, there are reasons to be suspicious of estimates based on more objective measures as well. In this paper I construct a statistical model incorporating both self-reported and objective measures of health. I use the model to show the potential biases involved in using either measure of health or in using one to instrument the other- When outside information on the validity of self-reported measures of health are incorporated into the model estimates suggest that the self-reported measures of health perform better than many have believed.