IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/9554.html
   My bibliography  Save this paper

Exploring the Health-Wealth Nexus

Author

Listed:
  • Jonathan Meer
  • Douglas L. Miller
  • Harvey S. Rosen

Abstract

The casual links between health and economic resources have long concerned social scientists. We use four waves of data from the Panel Study of Income Dynamics to analyze the impact of wealth upon an individual's health status. The difficulty in approaching this task that has bedeviled previous studies is that wealth may be endogenous; a priori, it is just as likely that changes in health affect wealth as vice versa. We argue that inheritance is a suitable instrument for the change in wealth, and implement a straightforward instrumental variables strategy to deal with this problem. Our results suggest that the causal relationship running from wealth to health may not be as strong as first appears. In the data, wealth exerts a positive and statistically significant effect on health status, but it is very small in magnitude. Instrumental variables estimation leaves the point estimate approximately the same, but renders it insignificantly different from zero. And even when the point estimate is increased by twice its standard error, the quantitative effect is small. We conclude that the wealth-health connection is not driven by short run changes in wealth.

Suggested Citation

  • Jonathan Meer & Douglas L. Miller & Harvey S. Rosen, 2003. "Exploring the Health-Wealth Nexus," NBER Working Papers 9554, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9554
    Note: PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w9554.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1993. "The Carnegie Conjecture: Some Empirical Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 413-435.
    2. Robert B. Barsky & Miles S. Kimball & F. Thomas Juster & Matthew D. Shapiro, 1995. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Survey," NBER Working Papers 5213, National Bureau of Economic Research, Inc.
    3. Ellen Meara, 2001. "Why is Health Related to Socioeconomic Status?," NBER Working Papers 8231, National Bureau of Economic Research, Inc.
    4. John Bound & David A. Jaeger & Regina Baker, 1993. "The Cure Can Be Worse than the Disease: A Cautionary Tale Regarding Instrumental Variables," NBER Technical Working Papers 0137, National Bureau of Economic Research, Inc.
    5. Mark B. McClellan, 1998. "Health Events, Health Insurance, and Labor Supply: Evidence from the Health and Retirement Survey," NBER Chapters, in: Frontiers in the Economics of Aging, pages 301-350, National Bureau of Economic Research, Inc.
    6. Ettner, Susan L., 1996. "New evidence on the relationship between income and health," Journal of Health Economics, Elsevier, vol. 15(1), pages 67-85, February.
    7. Stephen Wu, 2003. "The Effects of Health Events on the Economic Status of Married Couples," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
    8. Orazio P. Attanasio & Carl Emmerson, 2001. "Differential Mortality in the UK," NBER Working Papers 8241, National Bureau of Economic Research, Inc.
    9. Amemiya, Takeshi, 1978. "The Estimation of a Simultaneous Equation Generalized Probit Model," Econometrica, Econometric Society, vol. 46(5), pages 1193-1205, September.
    10. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    11. Smith, James P, 1998. "Socioeconomic Status and Health," American Economic Review, American Economic Association, vol. 88(2), pages 192-196, May.
    12. 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.
    13. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
    14. Orazio P. Attanasio & Hilary Williamson Hoynes, 2000. "Differential Mortality and Wealth Accumulation," Journal of Human Resources, University of Wisconsin Press, vol. 35(1), pages 1-29.
    15. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    16. Angus S. Deaton & Christina Paxson, 2004. "Mortality, Income, and Income Inequality over Time in Britain and the United States," NBER Chapters, in: Perspectives on the Economics of Aging, pages 247-286, National Bureau of Economic Research, Inc.
    17. Michael Hurd & Daniel McFadden & Angela Merrill & Tiago Ribeiro, 2000. "Healthy, Wealthy, and Wise? Socioeconomic Status and Morbidity/Mortality," Econometric Society World Congress 2000 Contributed Papers 1887, Econometric Society.
    18. McDonough, P. & Duncan, G.J. & Williams, D. & House, J., 1997. "Income dynamics and adult mortality in the United States, 1972 through 1989," American Journal of Public Health, American Public Health Association, vol. 87(9), pages 1476-1483.
    19. Robert B. Barsky & F. Thomas Juster & Miles S. Kimball & Matthew D. Shapiro, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 537-579.
    20. repec:pri:cheawb:deaton_paxson_mortality_ukus.pdf is not listed on IDEAS
    21. repec:pri:cheawb:deaton_paxson_mortality_ukus is not listed on IDEAS
    22. John Cawley, 2000. "Body Weight and Women's Labor Market Outcomes," NBER Working Papers 7841, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Adams & Michael D. Hurd & Daniel L. McFadden & Angela Merrill & Tiago Ribeiro, 2004. "Healthy, Wealthy, and Wise? Tests for Direct Causal Paths between Health and Socioeconomic Status," NBER Chapters, in: Perspectives on the Economics of Aging, pages 415-526, National Bureau of Economic Research, Inc.
    2. Fichera, Eleonora & Savage, David, 2015. "Income and Health in Tanzania. An Instrumental Variable Approach," World Development, Elsevier, vol. 66(C), pages 500-515.
    3. Owen O'Donnell & Eddy Van Doorslaer & Tom Van Ourti, 2013. "Health and Inequality," Tinbergen Institute Discussion Papers 13-170/V, Tinbergen Institute.
    4. Oscar Erixson, 2017. "Health responses to a wealth shock: evidence from a Swedish tax reform," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(4), pages 1281-1336, October.
    5. Meer, Jonathan & Rosen, Harvey S., 2004. "Insurance and the utilization of medical services," Social Science & Medicine, Elsevier, vol. 58(9), pages 1623-1632, May.
    6. Jonathan Meer & Harvey S. Rosen, 2002. "Insurance, Health, and the Utilization of Medical Services," Working Papers 117, Princeton University, Department of Economics, Center for Economic Policy Studies..
    7. Gardner, Jonathan & Oswald, Andrew, 2004. "How is mortality affected by money, marriage, and stress?," Journal of Health Economics, Elsevier, vol. 23(6), pages 1181-1207, November.
    8. Chulhee Lee, 2003. "Health and Wealth Accumulation: Evidence from Nineteenth-Century America," NBER Working Papers 10035, National Bureau of Economic Research, Inc.
    9. Angela C. Lyons & Tansel Yilmazer, 2005. "Health and Financial Strain: Evidence from the Survey of Consumer Finances," Southern Economic Journal, John Wiley & Sons, vol. 71(4), pages 873-890, April.
    10. Antecol, Heather & Bedard, Kelly & Helland, Eric, 2001. "Does Single Parenthood Increase the Probability of Teenage Promiscuity, Drug Use, and Crime? Evidence from Divorce Law Changes," University of California at Santa Barbara, Economics Working Paper Series qt3fc7n20b, Department of Economics, UC Santa Barbara.
    11. Chen, Chun-Chih & Chen, Chin-Shyan & Liu, Tsai-Ching & Lin, Ying-Tzu, 2012. "Stock or stroke? Stock market movement and stroke incidence in Taiwan," Social Science & Medicine, Elsevier, vol. 75(11), pages 1974-1980.
    12. Ellen Meara, 2001. "Why is Health Related to Socioeconomic Status?," NBER Working Papers 8231, National Bureau of Economic Research, Inc.
    13. Ariadna Jou & Nuria Mas & Carles Vergara-Alert, 2023. "Housing Wealth, Health and Deaths of Despair," The Journal of Real Estate Finance and Economics, Springer, vol. 66(3), pages 569-602, April.
    14. Irina Grafova, 2007. "Your Money or Your Life: Managing Health, Managing Money," Journal of Family and Economic Issues, Springer, vol. 28(2), pages 285-303, June.
    15. repec:pri:cepsud:85rosen is not listed on IDEAS
    16. Maite Blázquez Cuesta & Elena Cottini & Herrarte, A. (Ainhoa), 2012. "GINI DP 39: Socioeconomic Gradient in Health: How Important is Material Deprivation?," GINI Discussion Papers 39, AIAS, Amsterdam Institute for Advanced Labour Studies.
    17. Manuel Denzer, 2019. "Estimating Causal Effects in Binary Response Models with Binary Endogenous Explanatory Variables - A Comparison of Possible Estimators," Working Papers 1916, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz.
    18. Borowiecki, Karol Jan & Kavetsos, Georgios, 2015. "In fatal pursuit of immortal fame: Peer competition and early mortality of music composers," Social Science & Medicine, Elsevier, vol. 134(C), pages 30-42.
    19. Thomas E. Guerrero & C. Angelo Guevara & Elisabetta Cherchi & Juan de Dios Ortúzar, 2021. "Addressing endogeneity in strategic urban mode choice models," Transportation, Springer, vol. 48(4), pages 2081-2102, August.
    20. Kahouli, Sondès, 2020. "An economic approach to the study of the relationship between housing hazards and health: The case of residential fuel poverty in France," Energy Economics, Elsevier, vol. 85(C).
    21. Loree, Jacob, 2015. "State Level Income Inequality and Individual Self-Reported Health Status: Evidence from the United States," MPRA Paper 72638, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:9554. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.