Appendix Table 4.

Summary of results from two methods of estimating the “additional” effect of education, for two-person households age 65 and over

	Asset quintile
	1 (low)	2	3	4	5 (high)
Additional education effect--method 1	49,998	63,426	49,472	34,241	139,326
Additional education effect--method 2	58,772	78,761	62,846	42,338	153,543
Difference in estimates--method 2 minus method 1	$8,774	$15,336	$13,373	$8,097	$14,217
Reduction in the sum of pathway effects--method 2 minus method 1	−$8,600	−$14,766	−$12,381	−$8,031	−$14,363
Percent reduction in sum of the pathway effects--method 2 minus method 1	−26.8%	−29.2%	−21.3%	−12.7%	−3.1%

Note: The text discusses two methods of estimating the effect of education not accounted for by included pathways (“additional effect of education”). Method 1 obtains estimates by regressing the residuals from equation (2) on the education variables. Method 2 directly adds the education variables to equation (2). The table summarizes the estimated effect of education for each method, and shows how the effect of education is allocated to pathway and additional effects. The first two lines show the estimated effect of college education (versus less than a high school degree) for each method. The difference between the two is shown in the third line and ranges from $8,774 in the first asset quintile to $14,217 in the fifth quintile. The fourth line shows the corresponding reduction in the sum of the pathway effects associated with the health and resource circumstances given at retirement. One is essentially the mirror image of the other. The percent reduction is show in the last line of the table. The percent reduction in the sum of the pathway effects is very small for the top asset quintile because the indirect effect of lagged assets is very large for this quintile and the coefficient on lagged assets is affected very little by the addition of education levels to the regression.