This paper analyzes the role that health status plays in household portfolio decisions using data from the Health and Retirement Study. The results indicate that health is a significant predictor of both the probability of owning different types of financial assets and the share of financial wealth held in each asset category. Households in poor health are less likely to hold risky financial assets, other things (including the level of total wealth) being the same. Poor health is associated with a smaller share of financial wealth held in risky assets and a larger share in safe assets. We find no evidence that the relationship between health status and portfolio allocation is driven by third variables' that simultaneously affect health and financial decisions. Further, the relationship between health status and portfolio choice does not appear to operate through the effect of poor health on individuals' attitudes toward risk, their planning horizons, or their health insurance status.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
9453.
Length: Date of creation: Jan 2003 Date of revision: Handle: RePEc:nbr:nberwo:9453
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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.:
Luigi Guiso & Tullio Jappelli, 2000.
"Household Portfolios in Italy,"
CSEF Working Papers
43, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
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John Y. Campbell, 2006.
"Household Finance,"
NBER Working Papers
12149, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
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John Y. Campbell, 2006.
"Household Finance,"
Journal of Finance,
American Finance Association, vol. 61(4), pages 1553-1604, 08.
[Downloadable!] (restricted)
Dimitrios Christelis & Tullio Jappelli & Mario Padula, 2006.
"Cognitive Abilities and Portfolio Choice,"
CSEF Working Papers
157, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
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Deborah Cobb-Clark & Vincent A. Hildebrand, 2006.
"The Wealth of Mexican Americans,"
CEPR Discussion Papers
519, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University.
[Downloadable!]