The Effects of Social Pensions on Mortality Among the Extreme Poor Elderly

The paper presented in this ZEW Research Seminar studies the effects of social pensions on mortality. The authors examine Peru’s social pension program Pension 65, which gives a transfer of about 34 USD a month to the extreme poor individuals aged 65 or over who have no other pensions. Using unique survey data obtained at the baseline of the program and matched with mortality registers of 2012-2019, they exploit the discontinuity around the program’s eligibility welfare index to obtain causal estimates. They find a significant effect of the program on reducing mortality, which holds under different specifications, robustness checks and even accounting for initial health differences. The authors obtain that, eight years after the program started, eligible individuals are 11 percentage points less likely to have died. This implies that eligible individuals could live about 2.6 years more than ineligible individuals. Thus, an investment of about 3,800 USD per person may extend life expectancy by one year among the elderly poor.