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The Impact of Health on Wealth: Empirical Evidence

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  • Umesh Ghimire

    (University of Connecticut)

Abstract

This paper empirically evaluates the impact of health on wealth. Using the frailty index as a measure of health and carefully accounting for the dynamic relationship between frailty and wealth, I find that su˙ering one more health deficit leads, on average, to a 2.45 percent decline in the household net worth of individuals between age 50 and 100. The household net worth of individuals with no college degree, poor health, and over the age of 70 is significantly negatively a˙ected by poor health. The results pass the tests of instrument validity and are consistent across several alternative definitions of wealth. Using financial net worth as a definition of wealth, I find that the average impact of frailty on wealth is the largest, while it is the smallest when wealth is defined to include only housing net worth.

Suggested Citation

  • Umesh Ghimire, 2020. "The Impact of Health on Wealth: Empirical Evidence," Working papers 2020-19, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2020-19
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    References listed on IDEAS

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    More about this item

    Keywords

    Wealth; Health;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

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