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Handling the endogeneity of income to health using a field experiment in Taiwan


  • Fu-Min Tseng
  • Dennis Petrie


This paper uses an exogenous increase in income for a specific sub-group in Taiwan to explore the extent to which higher income leads to higher levels of health and wellbeing. In 1995, the Taiwanese government implemented the Senior Farmer Welfare Benefit Interim Regulation (SFWBIR) which was a pure cash injection, approximately US$110 (£70) per month in 1996, to senior farmers. A Difference-in-differences (DiD) approach is used on survey data from the Taiwanese Health and Living Status of Elderly in 1989 and 1996 to evaluate the short term effect of the SFWBIR on self-assessed health, depression, and life satisfaction. Senior manufacturing workers are employed as a comparison group for the senior farmers in the natural experiment because their demographic backgrounds are similar. This paper provides evidence that the increase in income from the SFWBIR significantly improved the mental health of senior farmers by reducing the scale of depression (CES-D) by 1.718, however, it had no significant short term impact on self-assessed health or life satisfaction.

Suggested Citation

  • Fu-Min Tseng & Dennis Petrie, 2012. "Handling the endogeneity of income to health using a field experiment in Taiwan," Dundee Discussion Papers in Economics 263, Economic Studies, University of Dundee.
  • Handle: RePEc:dun:dpaper:263

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    Cited by:

    1. Kronenberg, C. & Jacobs, R. & Zucchelli, E., 2015. "The impact of a wage increase on mental health: Evidence from the UK minimum wage," Health, Econometrics and Data Group (HEDG) Working Papers 15/08, HEDG, c/o Department of Economics, University of York.
    2. Jonathan de Quidt & Johannes Haushofer, 2016. "Depression for Economists," NBER Working Papers 22973, National Bureau of Economic Research, Inc.

    More about this item


    social welfare benefit; life satisfaction; mental health; natural experiment; difference-in-differences;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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