TY - JOUR
T1 - Exploring the health-wealth nexus
AU - Meer, Jonathan
AU - Miller, Douglas L.
AU - Rosen, Harvey S.
N1 - Funding Information:
We are grateful to Princeton’s Center for Economic Policy Studies for support. Doug Miller acknowledges financial support from the Robert Wood Johnson Foundation. We thank Bo Honoré, Erica Field, Adriana Lleras-Muney, and participants in Princeton’s Public Finance Working Group for useful comments, and Cynthia Cohen for assistance in the preparation of the manuscript.
PY - 2003/9
Y1 - 2003/9
N2 - The causal links between health and economic resources have long concerned social scientists. We use four waves of data from the Panel Study of Income Dynamics (PSID) to analyze the impact of wealth upon an individual's health status. The difficulty in approaching this task that has bedeviled previous studies is that wealth may be endogenous; a priori, it is just as likely that changes in health affect wealth as vice versa. We argue that inheritance is a suitable instrument for the change in wealth, and implement a straightforward instrumental variables strategy to deal with this problem. Our results suggest that the causal relationship running from wealth to health may not be as strong as first appears. In the data, wealth exerts a positive and statistically significant effect on health status, but it is very small in magnitude. Instrumental variables estimation leaves the point estimate approximately the same, but renders it insignificantly different from zero. And even when the point estimate is increased by twice its standard error (S.E.), the quantitative effect is small. We conclude that the wealth-health connection is not driven by short run changes in wealth.
AB - The causal links between health and economic resources have long concerned social scientists. We use four waves of data from the Panel Study of Income Dynamics (PSID) to analyze the impact of wealth upon an individual's health status. The difficulty in approaching this task that has bedeviled previous studies is that wealth may be endogenous; a priori, it is just as likely that changes in health affect wealth as vice versa. We argue that inheritance is a suitable instrument for the change in wealth, and implement a straightforward instrumental variables strategy to deal with this problem. Our results suggest that the causal relationship running from wealth to health may not be as strong as first appears. In the data, wealth exerts a positive and statistically significant effect on health status, but it is very small in magnitude. Instrumental variables estimation leaves the point estimate approximately the same, but renders it insignificantly different from zero. And even when the point estimate is increased by twice its standard error (S.E.), the quantitative effect is small. We conclude that the wealth-health connection is not driven by short run changes in wealth.
KW - Health
KW - Panel Study of Income Dynamics (PSID)
KW - Wealth
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U2 - 10.1016/S0167-6296(03)00059-6
DO - 10.1016/S0167-6296(03)00059-6
M3 - Article
C2 - 12946455
AN - SCOPUS:0042388484
SN - 0167-6296
VL - 22
SP - 713
EP - 730
JO - Journal of Health Economics
JF - Journal of Health Economics
IS - 5
ER -