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The Impact of Income Shocks on Health: Evidence from Cohort Data

Author

Listed:
  • Jérome Adda
  • James Banks
  • Hans-Martin von Gaudecker

    (Munich Center for the Economics of Aging (MEA))

Abstract

We study the effect of permanent income innovations on health for a prime-aged population. Using information on more than half a million individuals sampled over a twenty-five year period in three different cross-sectional surveys we aggregate data by date-of-birth cohort to construct a ’synthetic cohort’ dataset with details of income, expenditure, socio-demographic factors, health outcomes and selected risk factors. We then exploit structural and arguably exogenous changes in cohort incomes over the eighties and nineties to uncover causal effects of permanent income shocks on health. We find that such income innovations have little effects on health, but do affect health behaviour and mortality.

Suggested Citation

  • Jérome Adda & James Banks & Hans-Martin von Gaudecker, 2007. "The Impact of Income Shocks on Health: Evidence from Cohort Data," MEA discussion paper series 07146, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    • Handle: RePEc:mea:meawpa:07146
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    References listed on IDEAS

    as
    1. Angus S. Deaton & Christina Paxson, 2001. "Mortality, Education, Income, and Inequality among American Cohorts," NBER Chapters, in: Themes in the Economics of Aging, pages 129-170, National Bureau of Economic Research, Inc.
    2. Ruhm, Christopher J., 2005. "Healthy living in hard times," Journal of Health Economics, Elsevier, vol. 24(2), pages 341-363, March.
    3. Ruhm, Christopher J., 2003. "Good times make you sick," Journal of Health Economics, Elsevier, vol. 22(4), pages 637-658, July.
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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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