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Comment on "A Note on the Steady State Assumption and Expectancy Bias" by ProQuest


A comment on "A Note on the Steady State Assumption and Expectancy Bias" is presented. McCollister and Pflaum (MP, 2007) maintain that forensic economists frequently treat dynamic variables considered in worklife and life expectancy calculations as fixed in the development of life and worklife tables. This procedure can lead to substantial errors. To estimate worklife expectancy, they multiply the probabilities for marital status by those of the corresponding labor force participation status and the probability of living to that age. That is, in order to capture the dynamic nature of marital status, MP make labor force participation a fundamental building block of worklife expectancy. The single MP example worklife expectancy calculation deals with various marital states (married, widowed, divorced, separated, and single) and transition probabilities between those states. The MP note contains two interesting tables showing male and female participation rates by marital states. Differences between married and never married participation rates for males in mid-life are dramatic.

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