The Causal Effects of Aging and Retirement on Social Networks and Loneliness in Europe; An Instrumental Variable Approach

It is expected that by 2060 the proportion of the population of the European Union aged above 65 will have increased to 30% and the proportion of those aged above 80 to have increased to 12% (Davies, 2014). This has prompted increase interest in research on issues such as determinants of the timing retirement, how retirement effects one’s health, life satisfaction, the quality of pensions, et cetera (Ekerdt, 2010). Often such studies have come to contradicting conclusions. MacBride (1976), for example,
shows that it is often not clear whether the outcomes being studied, such as health, are the result of retirement per se or just aging. One area where such unclarity exists is regarding pensioners’ social wellbeing. Some research, for example have shown that pensioners’ social satisfaction can often be quite low, with upwards to 40% of the retired population indicating having low life satisfaction (ibid.). But again, it remains unclear whether this is a matter of retirement or age, as some studies have shown advanced age being a major factor contributing to a deterioration of social well-being (Savikko et al. 2005)