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Does Money Protect Health Status? Evidence from South African Pensions

In: Perspectives on the Economics of Aging

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  • Anne Case

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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Suggested Citation

  • Anne Case, 2004. "Does Money Protect Health Status? Evidence from South African Pensions," NBER Chapters, in: Perspectives on the Economics of Aging, pages 287-312, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:10346
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    References listed on IDEAS

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    1. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," The World Bank Economic Review, World Bank Group, vol. 17(1), pages 1-25, June.
    2. Victor R. Fuchs, 1982. "Economic Aspects of Health," NBER Books, National Bureau of Economic Research, Inc, number fuch82-1.
    3. Anne Case & Angus Deaton, 1999. "School Inputs and Educational Outcomes in South Africa," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 1047-1084.
    4. Case, Anne & Deaton, Angus, 1998. "Large Cash Transfers to the Elderly in South Africa," Economic Journal, Royal Economic Society, vol. 108(450), pages 1330-1361, September.
    5. Servaas van der Berg, 2002. "Issues in South African Social Security," Working Papers 01/2002, Stellenbosch University, Department of Economics.
    6. Victor R. Fuchs, 1982. "Time Preference and Health: An Exploratory Study," NBER Chapters, in: Economic Aspects of Health, pages 93-120, National Bureau of Economic Research, Inc.
    7. 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.
    8. Fuchs, Victor R. (ed.), 1982. "Economic Aspects of Health," National Bureau of Economic Research Books, University of Chicago Press, number 9780226267852, December.
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    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • D1 - Microeconomics - - Household Behavior

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