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Socio-Economic Status, Health Shocks, Life Satisfaction and Mortality: Evidence from an Increasing Mixed Proportional Hazard Model

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Author Info
Paul Frijters
John Haisken-DeNew
Michael Shields

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Abstract

The socio-economic gradient in health remains a controversial topic in economics and other social sciences. In this paper we develop a new duration model that allows for unobserved persistent individual-specific health shocks and provides new evidence on the roles of socio-economic characteristics in determining length of life using 19-years of high-quality panel data from the German Socio-Economic Panel. We also contribute to the rapidly growing literature on life satisfaction by testing if more satisfied people live longer. Our results clearly confirm the importance of income, education and marriage as important factors in determining longevity. For example, a one-log point increase in real household monthly income leads to a 12% decline in the probability of death. We find a large role of unobserved health shocks, with 5-years of shocks explaining the same amount of the variation in length of life as all the other observed individual and socio-economic characteristics (with the exception of age) combined. Individuals with a high level of life satisfaction when initially interviewed live significantly longer, but this effect is completely due to the fact that less satisfied individuals are typically less healthy. We are also able to confirm the findings of previous studies that self-assessed health status has significant explanatory power in predicting future mortality and is therefore a useful measure of morbidity. Finally, we suggest that the duration model developed in this paper is a useful tool when analysing a wide-range of single-spell durations where individual-specific shocks are likely to be important.

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Paper provided by Centre for Economic Policy Research, Research School of Social Sciences, Australian National University in its series CEPR Discussion Papers with number 496.

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Length: 34 pages
Date of creation: Sep 2005
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Handle: RePEc:auu:dpaper:496

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Related research
Keywords: education; marriage; life satisfaction; shocks; mortality; duration analysis;

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Find related papers by JEL classification:
I1 - Health, Education, and Welfare - - Health
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data

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References listed on IDEAS
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.:
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  2. Baker, Michael & Melino, Angelo, 2000. "Duration dependence and nonparametric heterogeneity: A Monte Carlo study," Journal of Econometrics, Elsevier, vol. 96(2), pages 357-393, June. [Downloadable!] (restricted)
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  3. Lindahl, Mikael, 2002. "Estimating the Effect of Income on Health and Mortality Using Lottery Prizes as Exogenous Source of Variation in Income," IZA Discussion Papers 442, Institute for the Study of Labor (IZA). [Downloadable!]
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  14. Van den Berg, Gerard J., 2000. "Duration Models: Specification, Identification, and Multiple Durations," MPRA Paper 9446, University Library of Munich, Germany. [Downloadable!]
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  15. Paul Contoyannis & Andrew M. Jones & Nigel Rice, 2004. "The dynamics of health in the British Household Panel Survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(4), pages 473-503. [Downloadable!]
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  19. Heckman, James J, 1991. "Identifying the Hand of the Past: Distinguishing State Dependence from Heterogeneity," American Economic Review, American Economic Association, vol. 81(2), pages 75-79, May. [Downloadable!] (restricted)
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  23. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring. [Downloadable!] (restricted)
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. Silvia Balia, 2007. "Reporting expected longevity and smoking: evidence from the SHARE," Working Paper CRENoS 200705, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
    Other versions:
  2. David W. Johnston & Carol Propper & Michael A. Shields, 2007. "Comparing Subjective and Objective Measures of Health: Evidence from Hypertension for the Income/Health Gradient," IZA Discussion Papers 2737, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Boyce, Christopher J. & Oswald, Andrew J., 2008. "Do People Become Healthier after Being Promoted?," IZA Discussion Papers 3894, Institute for the Study of Labor (IZA). [Downloadable!]
  4. 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:
  5. Matthew D. Rablen & Andrew J. Oswald, 2007. "Mortality and Immortality," IZA Discussion Papers 2560, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Andrew M. Jones & Stefanie Schurer, 2007. "How Does Heterogeneity Shape the Socioeconomic Gradient in Health Satisfaction?," Ruhr Economic Papers 0008, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
    Other versions:
  7. R. Veenhoven, 2008. "Healthy happiness: effects of happiness on physical health and the consequences for preventive health care," Journal of Happiness Studies, Springer, vol. 9(3), pages 449-469, September. [Downloadable!] (restricted)
  8. Lelkes, Orsolya, 2008. "Happiness over the life cycle: exploring age-specific preferences," MPRA Paper 7302, University Library of Munich, Germany. [Downloadable!]
  9. Wenshu Gao & Russell Smyth, 2009. "Health Human Capital, Height and Wages in China," Monash Economics Working Papers 05/09, Monash University, Department of Economics. [Downloadable!]
  10. Gisela Hostenkamp & Michael Stolpe, 2008. "The Social Costs of Health-related Early Retirement in Germany: Evidence from the German Socio-economic Panel," Kiel Working Papers 1415, Kiel Institute for the World Economy. [Downloadable!]
  11. 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!]
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