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Heterogeneity, State Dependence and Health

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Author Info
Timothy J Halliday () (Department of Economics, University of Hawaii at Manoa, John A Burns School of Medicine)

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Abstract

In this paper, we use longitudinal data on Self-Reported Health Status from the Panel Study of Income Dynamics to estimate a model of the evolution of health over the life-cycle. The model allows for two sources of persistence in health: unobserved heterogeneity, which models an individual’s (unobserved) ability to cope with health shocks, and state dependence, which models the extent to which the ability to cope with health shocks depends on health status. We allow for flexibility in both sources of persistence. Estimation indicates that heterogeneity is an important determinant of health suggesting that a person’s health today has important antecedents earlier on in life. We also find evidence of state dependence. However, its magnitude depends crucially on the individual’s age and unobserved heterogeneity. The relative contributions of heterogeneity and state dependence that we uncover have different implications for how health policy should be conducted.

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File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_05-3.pdf
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File Function: First version, 2005
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Paper provided by University of Hawaii at Manoa, Department of Economics in its series Working Papers with number 200503.

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Length: 36 pages
Date of creation: 2005
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Handle: RePEc:hai:wpaper:200503

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Related research
Keywords: health; dynamic panel data models; gradient;

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Find related papers by JEL classification:
I1 - Health, Education, and Welfare - - Health
C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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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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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. Timothy J. Halliday, 2006. "Testing for State Dependence with Time-Variant Transition Probabilities," Working Papers 200614, University of Hawaii at Manoa, Department of Economics. [Downloadable!]
    Other versions:
  2. Bo E. Honoré & Elie Tamer, 2002. "Bounds on Parameters in Dynamic Discrete Choice Models," CAM Working Papers 2004-23, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics, revised Aug 2004. [Downloadable!]
  3. Christelis, Dimitris & Sanz-de-Galdeano, Anna, 2009. "Smoking Persistence Across Countries: An Analysis Using Semi-Parametric Dynamic Panel Data Models with Selectivity," IZA Discussion Papers 4336, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Stefanie Schurer, 2008. "Discrete Heterogeneity in the Impact of Health Shocks on Labour Market Outcomes," Melbourne Institute Working Paper Series wp2008n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  5. Jäckle, Robert & Himmler, Oliver, 2007. "Health and Wages - Panel data estimates considering selection and endogeneity," MPRA Paper 11578, University Library of Munich, Germany, revised Nov 2008. [Downloadable!]
    Other versions:
  6. Cristina Hernández-Quevedo & Andrew M. Jones & Nigel Rice, 2007. "Persistence in health limitations: a European comparative analysis," Health, Econometrics and Data Group (HEDG) Working Papers 07/03, HEDG, c/o Department of Economics, University of York. [Downloadable!]
    Other versions:
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