A Microsimulation Model to Estimate Errors in Cross-Sectional Estimates of Disability-Adjusted Life Expectancy

Alberto Palloni, University of Wisconsin at Madison
Mercedes Ayuso, Universitat Autònoma de Barcelona
Montserrat Guillén, Universitat Autònoma de Barcelona
Malena Monteverde, Universitat Autònoma de Barcelona

We evaluate the accuracy of alternative methods to assess disability-adjusted life expectancies among elderly people. We pose a three-state model (healthy(H), disabled(D), dead(DD)) with four transitions (H to D, D to DD, H to DD, and D to H) and use Montecarlo simulations to generate individual trajectories. The rates in the simulations reflect the experience of the US population (HRS). We apply three methods to estimate disability-adjusted life expectancy, each using only partially observed information: (a) Sullivan’s calculations; (b) increment-decrement tables; (c) a new procedure to estimate transition probabilities H to D from observed prevalence and overall mortality. We compare resulting estimates with the true values embedded in simulations under conditions departing from assumptions invoked by the methods, including functional forms, lack of stationarity, mortality differentials between disability status, and intensity of the transition D to H. Finally, we assess the impact of these errors for elderly care costs calculations.