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Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status

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  • James P. Smith

Abstract

This paper sketches theoretical reasons why health may alter household savings and provides evidence on the empirical impact of health shocks on household wealth. The impacts on saving are quantitatively large and only partly explained by increased out-of-pocket medical expenses. Other contributing factors include reduced earnings and a revision in life expectancy. The author also delves into reasons why economic status, access to medical care, and deleterious personal behaviors have been rejected as insufficient explanations. New theories emphasize long-term impacts of early childhood or even intrauterine factors, cumulative effects of prolonged exposures to stress, or reactions of macrosocietal factors like rising levels of income inequality.

Suggested Citation

  • 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.
  • Handle: RePEc:aea:jecper:v:13:y:1999:i:2:p:145-166
    Note: DOI: 10.1257/jep.13.2.145
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.13.2.145
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    References listed on IDEAS

    as
    1. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1995. "Precautionary Saving and Social Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 360-399, April.
    2. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1, May.
    3. Lillard, Lee A & Weiss, Yoram, 1997. "Uncertain Health and Survival: Effects on End-of-Life Consumption," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(2), pages 254-268, April.
    4. Smith, J-P, 1997. "Inheritances and Bequests," Papers 97-04, RAND - Labor and Population Program.
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    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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