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Health and wealth of elderly couples: Causality tests using dynamic panel data models

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Author Info
Michaud, Pierre-Carl
van Soest, Arthur

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Abstract

A positive relationship between socio-economic status (SES) and health, the "health-wealth gradient", is repeatedly found in many industrialized countries. This study analyzes competing explanations for this gradient: causal effects from health to wealth (health causation) and causal effects from wealth to health (wealth or social causation). Using six biennial waves of couples aged 51-61 in 1992 from the US Health and Retirement Study, we test for causality in panel data models incorporating unobserved heterogeneity and a lag structure supported by specification tests. In contrast to tests relying on models with only first order lags or without unobserved heterogeneity, these tests provide no evidence of causal wealth health effects. On the other hand, we find strong evidence of causal effects from both spouses' health on household wealth. We also find an effect of the husband's health on the wife's mental health, but no other effects from one spouse's health to health of the other spouse.

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File URL: http://www.sciencedirect.com/science/article/B6V8K-4S98TSK-1/2/a48dddbe6815bfc7d5fd5fcb3bcf180e
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Publisher Info
Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 27 (2008)
Issue (Month): 5 (September)
Pages: 1312-1325
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Handle: RePEc:eee:jhecon:v:27:y:2008:i:5:p:1312-1325

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Web page: http://www.elsevier.com/locate/inca/505560

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michaud, Pierre-Carl & Goldman, Dana P. & Lakdawalla, Darius N. & Zheng, Yuhui & Gailey, Adam H., 2009. "Understanding the Economic Consequences of Shifting Trends in Population Health," IZA Discussion Papers 4366, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Paul Frijters & Aydogan Ulker, 2008. "Robustness in Health Research: Do differences in health measures, techniques, and time frame matter?," NCER Working Paper Series 28, National Centre for Econometric Research. [Downloadable!]
    Other versions:
  3. Nilsson, William, 2006. "Socioeconomic Status and Sickness Absence - What do twins tell us about causality?," UmeÃ¥ Economic Studies 670, Umeå University, Department of Economics. [Downloadable!]
  4. Florian Heiss & Axel Börsch-Supan & Michael Hurd & David Wise, 2007. "Pathways to Disability: Predicting Health Trajectories," MEA discussion paper series 07131, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
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  5. Deborah A. Cobb-Clark & Vincent Hildebrand, 2009. "Portfolio Allocation in the Face of a Means-Tested Public Pension," Social and Economic Dimensions of an Aging Population Research Papers 260, McMaster University. [Downloadable!]
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  6. Gisela Hostenkamp & Michael Stolpe, 2006. "The Health Gradient and Early Retirement: Evidence from the German Socio-economic Panel," Kiel Working Papers 1305, Kiel Institute for the World Economy. [Downloadable!]
  7. William Nilsson, 2008. "Spousal Income and Sick Leave: What do Twins Tell us About Causality?," Journal of Family and Economic Issues, Springer, vol. 29(3), pages 407-426, September. [Downloadable!] (restricted)
  8. Florence Jusot, 2006. "The shape of the relationship between mortality and income in France," Annales d'Economie et de Statistique, ADRES, issue 83-84, pages 04, Juillet-D. [Downloadable!]
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