Gabriella Berloffa () (University of Trento) Agar Brugiavini () (Department of Economics, University Of Venice Ca’ Foscari) Dino Rizzi () (Department of Economics, University of Venice Ca’ Foscari)
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This paper uses data from the Health and Retirement Study (HRS) to study the relationship between health status and economic welfare at household level. We develop a model to estimate the welfare cost of ill health by exploiting the methodology of the equivalence scales. The crucial variables in this approach are, besides the health status (measured in several dimensions), the economic decisions of the household which can be directly related to health conditions, such as health-related expenses. By estimating a demand system we derive health-equivalence scales to learn about the cost of health conditions on economic welfare, controlling for other covariates. Our estimates suggest that – when taking account of health – the welfare of households in poor health drops substantially and inequality increases. There are important social welfare costs associated with differences in the health status of the elderly in the USA.
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Paper provided by University of Venice "Ca' Foscari", Department of Economics in its series Working Papers with number
2006_41.
Find related papers by JEL classification: I12 - Health, Education, and Welfare - - Health - - - Health Production I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped
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