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Does Money Protect Health Status? Evidence from South African Pensions

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  • Anne Case

    (Princeton University and the NBER)

Abstract

The channels by which better health leads to higher income, and those by which higher income protects health status, are of interest to both researchers and policy makers. In general, quantifying the impact of income on health is difficult, given the simultaneous determination of health and income. In this paper, we quantify the impact on health status of a large, exogenous increase in income—that associated with the South African state old age pension. Elderly Black and Coloured men and women who did not anticipate receiving large pensions in their lifetimes, and who did not pay into a pension system, are currently receiving more than twice median Black income per capita. These elderly men and women generally live in large households, and this paper documents the effect of the pension on the pensioners, on other adult members of their households, and on the children who live with them. We find, in households that pool income, that the pension protects the health of all household members, working in part to protect the nutritional status of household members, in part to improve living conditions, and in part to reduce the stress under which the adult household members negotiate day to day life. The health effects of delivering cash provide a benchmark against which other health-related interventions can be evaluated.

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Bibliographic Info

Paper provided by Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies. in its series Working Papers with number 205.

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Date of creation: Aug 2001
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Handle: RePEc:pri:rpdevs:case_money_protect_nber

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  1. Case, A. & Deaton, A., 1996. "Large Cash Transfers to the Elderly in South Africa," Papers 176, Princeton, Woodrow Wilson School - Development Studies.
  2. Esther Duflo, 2000. "Grandmothers and Granddaughters: Old Age Pension and Intra-household Allocation in South Africa," NBER Working Papers 8061, National Bureau of Economic Research, Inc.
  3. Victor R. Fuchs, 1980. "Time Preference and Health: An Exploratory Study," NBER Working Papers 0539, National Bureau of Economic Research, Inc.
  4. 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.
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