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No Pain, No Strain: Impact of Health on the Financial Security of Older Americans


  • Angela Lyons
  • Hyungsoo Kim


This study uses data from the 2002 and 2004 Health and Retirement Study to investigate the impact that health problems have on the financial strain of older Americans. Two-stage probit models are estimated for a series of financial ratio guidelines that take into account household solvency, liquidity, and investment asset accumulation. We test our models using a subjective measure of self-reported health status and two objective measures of health that control for the severity of specific health conditions. The results show that health problems significantly increase the likelihood of financial strain for older individuals, and the magnitudes of the effects vary by the type of financial strain and how health status is defined. Those most likely to experience some type of financial strain are those with severe chronic conditions. The results provide insight into the future financial security of older Americans and have important implications for health policy and research.

Suggested Citation

  • Angela Lyons & Hyungsoo Kim, 2007. "No Pain, No Strain: Impact of Health on the Financial Security of Older Americans," NFI Working Papers 2007-WP-12, Indiana State University, Scott College of Business, Networks Financial Institute.
  • Handle: RePEc:nfi:nfiwps:2007-wp-12

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    References listed on IDEAS

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    Cited by:

    1. Jonathan Gruber & Helen Levy, 2009. "The Evolution of Medical Spending Risk," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 25-48, Fall.
    2. Sharifah Haron & Deanna Sharpe & Jariah Masud & Mohamed Abdel-Ghany, 2010. "Health Divide: Economic and Demographic Factors Associated with Self-Reported Health Among Older Malaysians," Journal of Family and Economic Issues, Springer, vol. 31(3), pages 328-337, September.
    3. Irina Grafova, 2011. "Financial Strain and Smoking," Journal of Family and Economic Issues, Springer, vol. 32(2), pages 327-340, June.

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