Yung-Ping Chen (November 24, 1930 – May 10, 2022) was an American economist and gerontologist of Chinese origin. He pioneered the concept of home equity conversion (reverse mortgages) in the United States and developed innovative approaches to the funding of Social Security benefits and long-term care. His scholarship contributed to a better understanding of the economic, political, and social implications and challenges created by the "mass aging" phenomenon—the ongoing and unprecedented shift to an increasingly elder-populated society.
Biography
Born in Jingjiang, Jiangsu Province, China, Chen went to the United States for graduate school in 1955 and remained there to teach economics and gerontology for 50 years. He retired in 2009. He was married and had three children and six grandchildren, including John Rose. A graduate of National Taiwan University in Taipei, he received his M.A. and Ph.D. in economics at the University of Washington, Seattle. He was professor emeritus of gerontology and a fellow in the Gerontology Institute at the University of Massachusetts Boston, where he was the first holder of the Frank J. Manning Eminent Scholar's Chair in Gerontology, a professorship established by the Massachusetts Legislature in 1988, and where he participated in launching the Ph.D. program in gerontology. Previously he was professor of economics and the first holder of the Frank M. Engle Distinguished Chair in Economic Security Research at the American College, Bryn Mawr, PA. Prior to that he taught at UCLA, Seattle Pacific College (now University), and the University of Washington. He served as delegate and/or consultant to four consecutive White House Conferences on Aging (1971 to 2005) and as delegate to the 1998 White House Conference on Social Security. A founding member of the National Academy of Social Insurance, he was a fellow in both the Gerontological Society of America and the World Demographic Association. He received the Actuarial Foundation's John E. Hanson Memorial Prize (2009, co-recipient), the Gerontological Society of America's Robert W. Kleemeier Award for Outstanding Research (2010), and the International Insurance Society's John S. Bickley Founder's Award Gold Medal for Excellence (2012).
Work
Chen's research and associated program and policy proposals were founded on the principles of (a) fostering personal responsibility and societal solidarity by combining public- and private-sector programs and policies when feasible; (b) addressing the inevitable contingencies of individual and societal finances by employing risk-pooling mechanisms of both private and social insurance; (c) augmenting the potential benefits from finite budget resources facing individual, household, or government by means of tradeoffs; and (d) placing greater value on enhancing income generation opportunities for individuals than on providing financial assistance to them, while recognizing the need for the latter under certain circumstances. His portfolio of work, embodied in some 200 publications, encompassed a range of concepts, policies, and programs that have advanced the knowledge base regarding old-age economic security from both the individual and the societal point of view. Chen's work fell principally into six areas:
1. Home-equity conversion (reverse mortgage) 2. Financing and benefit structure of Social Security 3. Funding long-term care 4. Gaps in private pension coverage for minority workers 5. Work and retirement options for older workers 6. Special tax treatments and economic status of the aged
Home-equity conversion (reverse mortgage)
In the early 1960s Chen began conducting research on income and wealth distribution among older persons. In an effort to address the dilemma of some older people being "income-poor and house-rich," Chen made the case for a voluntary conversion of home equity into annuity income as a means by which older homeowners could augment their income from other sources and keep their homes, while lessening the pressure on societal assistance programs.Testimony of Peter H. Bell, President & CEO, National Reverse Mortgage Lenders Association before the Subcommittee on Insurance, Housing & Community Opportunity House Financial Services Committee, May 9, 2012, U.S. House of Representatives. (https://financialservices.house.gov/uploadedfiles/hhrg-112-ba04-wstate-pbell-20120509.pdf) ["The first reverse mortgage loan is generally thought to have been made privately in 1961 by Nelson Haynes of Deering Savings & Loan in Portland, Maine to a widow named Nellie Young. Over the next 20 years, various studies and surveys were conducted to explore the viability of such a product, most notably those by Yung-Ping Chen of UCLA and Jack Guttentag of The Wharton School and largely driven by Ken Scholen, then working with the Wisconsin Board on Aging, who wrote three books on the subject." (p. 3)]Guttentag, J. M. Creating a New Financial Instrument: The Case of Reverse Mortgages. Working Paper No. 19-73. Rodney L. White Center for Financial Research, The Wharton School, University of Pennsylvania. 1973.(http://rodneywhite.wpengine.com/wp-content/uploads/2014/03/73-19.pdf) [In his footnote 1 (p. 2), Guttentag explains: "I first encountered the proposal [for a reverse mortgage instrument] in an unpublished manuscript by Gray, and incorporated it in a broader set of proposals for developing new financial instruments….At that time I was unaware of the work of Chen which had been published some two years earlier."]Guerin, J.L. Spotlight: A historical timeline of the HECM program. The Reverse Review, October 2012, 40-45. (http://www.reversereview.com/wp-content/uploads/2012/10/October.Spotlight.HECMTimeline1.pdf) ["1969: The reverse mortgage concept begins to take root at a congressional hearing before the Senate Committee on Aging. UCLA professor Yung-Ping Chen testifies: 'I think an actuarial mortgage plan in the form of a housing annuity can serve two purposes: First, to enable older homeowners to realize the fruits of savings in the form of home equity; and second, to enable those homeowners, who wish to remain in their homes either for physical convenience or for sentimental attachment, to do as they wish.' Intrigued, the committee chairman responds, 'Well, that is interesting.'" (p. 40)]Gibler, K. M., & Rabianski, J. Elderly interest in home equity conversion. Housing Policy Debate, 1993, 4(4), 565-588. (see p. 569) His 1973 monograph on the receptivity of home-equity conversion (reverse mortgage) inspired the first National Reverse Mortgage Development Conference in May 1979. The theory of home-equity conversion received a major boost in the policy arena when the reverse-mortgage conceptQuinn, J.B. On reverse mortgage. Newsweek. March 30, 1981, 75. (http://digitalcollections.library.cmu.edu/awweb/awarchive?type=file&item=663032) was endorsed by the 1981 White House Conference on Aging.The Conference recommended that "the FHA [Federal Housing Administration] should develop and/or pool insurance programs for reverse mortgage and deferred payment home repair loans." [1981 White House Conference on Aging Housing Recommendations: Hearing Before the Subcommittee on Housing and Consumer Interests of the Select Committee on Aging, House of Representatives, Ninety-seventh Congress, Second Session, March 8, 1982. (U.S. Government Printing Office, 1982, p. 6.)] The first reverse mortgage was issued in 1989 under an FHA-guaranteed Home Equity Conversion Mortgage (HECM) as a pilot program authorized by the 1987 Housing and Community Development Act. The program was made permanent by an act of Congress in 1998.
Financing and benefit structure of Social Security
Chen made a number of contributions to policy development in the area of Social Security, one of his career-long research interests.Achenbaum, W. A., & Albert, D. M. Profiles in gerontology: A biographical dictionary. Greenwood Publishing Group, 1995, 77-78.Rohrlich, G. F. Book Review of Social Security in a Changing Society. Monthly Labor Review, September 1981, 104(9), 54. He developed the concept of "total dependency ratio" (which combines the ratios to the working-age population of both aged beneficiaries and dependent children) as an improved method for evaluating overall costs of dependent populations.Ball, R. M. Cutting Social Security benefits is unnecessary and wrong: Reagan Social Security cuts and the Committee on Ways and Means response to the first budget resolution, Testimony before the Select Committee on Aging, House of Representatives, May 21, 1981. His analysis of the topic was discussed at the 1979 Advisory Council on Social Security,U. S. Department of Health, Education and Welfare. Social Security Financing and Benefits, Report of the 1979 Advisory Council on Social Security. Washington, DC: U.S. Government Printing Office, 1980, 243-285. (see pp. 281-285) and the Social Security trustees' annual report to Congress began reporting total dependency ratios along with aged dependency ratios,Committee on Ways and Means, U.S. House of Representatives. 1977 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds. 95th Congress. 1st session (House Document No. 95-150). Washington, DC U.S. Government Printing office, May 1977. (see Appendix A, p. 63.) a practice that continues today.
Against a backdrop of intensifying public debate in the late 1970s about Social Security's long-term solvency, a 1981 article by Chen was the first to call attention to the implications of proliferating employee fringe benefits for the solvency of Social Security. This work helped guide financing discussions throughout the Social Security "crisis debates" of the 1980s.Rinder, R., & Munnell, A. H. The Future of Social Security: An Exchange. New York Review of Books, March 17, 1983, 41-45. (see footnote 4) (https://www.nybooks.com/articles/archives/1983/mar/17/the-future-of-social-security-an-exchange/?insrc=toc)Woodbury, S. A., Substitution of wage and nonwage benefits. American Economic Review, March 1983, 166-182. (see p. 166)Wilkin, J. C., Gresch, R. V., & Glanz, M. P. Growth in fringe benefits. Actuarial Note No. 113, Office of the Actuary, Social Security Administration, June 1982. (see p. 1) (http://www.socialsecurity.gov/oact/NOTES/pdf_notes/note113.pdf)Koretz, G. Economic Diary column, Business Week, January 11, 1982, 24.Munnell, A.H. Employee benefits and the tax base. New England Economic Review. January/February 1984, 39-55. (see pp. 43-44)National Commission on Social Security Reform, Memorandum No. 50. Adjusting the payroll tax base to compensate for the erosion of the tax base due to the growth of fringes. September 7, 1982. (see pp. 1-2) (http://digitalcollections.library.cmu.edu/awweb/awarchive?type=file&item=708487)