The answer to this question requires information on the extent of housing wealth required to generate a sufficient income stream, as well as information on how long this income stream has to last. That is, how old are the owners and how much housing wealth do they have. For the U.S., Merrill et al (1996) argue that the potential demanders of reverse mortgages would be those with lower incomes, i.e. incomes less than $30,000 per year, and with house equity of at least three times that amount. With these restrictions they find that about 12 percent of the U.S. elderly-headed households, or about 1.5 million households, would be potential demanders of reverse mortgages.

For Russia to make a similar calculation requires three kinds of empirical data for the elderly: income; the value of the housing owned by them, particularly by those with lower incomes; and, finally, their expected life span, what is known in the insurance industry as the "life tables." Using this information, one can determine of how much of the poverty of the Russian elderly could in principle be addressed by new financial instruments.

**Empirical Methodology.** We combine income and housing data from the Moscow Longitudinal Household Survey (MLHS) with Russian life tables for men and women. **'9** We use them to modify an actuarial model devised by the U.S. Department of Housing and Urban Development to answer to two empirical questions. First, is there a significant group of elderly with substantial amounts of home equity and limited income who might benefit significantly from increased liquidity? Second, is the age distribution of the elderly population such that the payments that could be realized are large enough to lower the incidence or incidents of poverty?

Our use of data on Moscow, rather than the entire country, is dictated partially by data availability with respect to housing. Moscow does differ from the rest of the country. Socioeconomic conditions are unquestionably more favorable in Moscow. Pension incomes are higher, reflecting higher relative cost-of-living prices and an additional cash supplement provided by the local government. Finally, the Moscow real estate market has tended to be more active than most other markets, and apartments command prices above those in other cities, as described below. Consequently, our results cannot be taken as representative for the entire country. We present the evidence on Moscow as a first, if somewhat exaggerated, empirical perspective on the issue. We suspect that if there is not potential demand in Moscow it is not likely to be present elsewhere.

Due to the limited availability of socio-economic indicators, we use total monthly disposable income in the analysis. This figure includes wages and salaries, social security transfers, private transfers, and unearned income. We use the designated poverty line for

**19** The MLHS is an annual panel survey of 2,000 dwellings conducted every December in 1992-1995. We use data collected in the fourth wave, in December 1995. The data set contains comprehensive information pertaining to housing, including estimates on unit values, housing types, housing conditions, and privatization experiences. It also contains important demographic information about the household, such as the number and ages of family members, and sources of income. With the exception of housing assets, absent from the data set are non-income sources of wealth and consumption estimates which are important in determining the household's true standard of living. However, we are reassured by the fact that the salary estimates produced by the data are comparable to those reported in official statistics for the same time period. The average salary in the sample is 947,000 rubles compared to 930,600 reported by the State Committee on Statistics (Goskomstat). 1996. _Sotsial 'no-Ekonomicheskoe Polozhenie Rossii, 1995 g.,_ p. 487.

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