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How Does Heterogeneity Shape the Socioeconomic Gradient in Health Satisfaction?

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Author Info
Andrew M. Jones
Stefanie Schurer ()

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Abstract

Individual heterogeneity plays a key role in explaining variation in self-reported well-being and, in particular, health satisfaction. It is hypothesised that the influence of this heterogeneity varies over levels of health and increases over the life-cycle. These hypotheses are tested with data on health satisfaction from 22 waves of the German Socioeconomic Panel (GSOEP).Nonlinear fixed effects methods that allow for unobserved heterogeneity are not readily available for categorical measures of well-being. One common solution is to revert to conditional fixed effects methods, at the price of a high degree of information loss. Another common solution is to ignore the association between unobserved heterogeneity and socio-economic status by using pooled or random effects models, at the price of potential bias.We use a generalization of the conditional fixed effects logit, that allows for individual-specific reporting bias, heterogeneity in health endowments, and heterogeneity in the impact of income on health satisfaction. Adjusting for unobserved heterogeneity accounts for the relationship between income and very good health, but not between income and poorer health states. The income gradient for older age-groups is more strongly affected by controlling for unobserved heterogeneity: revealing an increasing influence of heterogeneity on health satisfaction over the life-span.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0008.

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Length: 59 pages
Date of creation: May 2007
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Handle: RePEc:rwi:repape:0008

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Related research
Keywords: Panel data; generalized conditional fixed effects logit; generalized ordered logit; health; GSOEP;

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Find related papers by JEL classification:
I12 - Health, Education, and Welfare - - Health - - - Health Production
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data

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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. Michael Fertig & Stefanie Schurer, 2007. "Labour Market Outcomes of Immigrants in Germany – The Importance of Heterogeneity and Attrition Bias," Ruhr Economic Papers 0020, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
  2. Jan Brenner, 2007. "Parental Impact on Attitude Formation - A Siblings Study on Worries about Immigration," Ruhr Economic Papers 0022, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
  3. Michael Fertig & Stefanie Schurer, 2007. "Labour Market Outcomes of Immigrants in Germany: The Importance of Heterogeneity and Attrition Bias," IZA Discussion Papers 2915, Institute for the Study of Labor (IZA). [Downloadable!]
  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!]
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