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Health, Welfare and Inequality

Author

Listed:
  • Gabriella Berloffa

    () (University of Trento)

  • Agar Brugiavini

    () (Department of Economics, University Of Venice Ca� Foscari)

  • Dino Rizzi

    () (Department of Economics, University of Venice Ca� Foscari)

Abstract

This paper uses data from the Health and Retirement Study (HRS) to study the relationship between health status and economic welfare at household level. We develop a model to estimate the welfare cost of ill health by exploiting the methodology of the equivalence scales. The crucial variables in this approach are, besides the health status (measured in several dimensions), the economic decisions of the household which can be directly related to health conditions, such as health-related expenses. By estimating a demand system we derive health-equivalence scales to learn about the cost of health conditions on economic welfare, controlling for other covariates. Our estimates suggest that � when taking account of health � the welfare of households in poor health drops substantially and inequality increases. There are important social welfare costs associated with differences in the health status of the elderly in the USA.

Suggested Citation

  • Gabriella Berloffa & Agar Brugiavini & Dino Rizzi, 2006. "Health, Welfare and Inequality," Working Papers 2006_41, Department of Economics, University of Venice "Ca' Foscari".
  • Handle: RePEc:ven:wpaper:2006_41
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    References listed on IDEAS

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    1. Michael D. Hurd & Susann Rohwedder, 2003. "The Retirement-Consumption Puzzle Anticipated and Actual Declines in Spending at Retirement," Working Papers DRU-3009, RAND Corporation.
    2. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, April.
    3. Jonathan Skinner & Weiping Zhou, 2004. "The Measurement and Evolution of Health Inequality: Evidence from the U.S. Medicare Population," NBER Working Papers 10842, National Bureau of Economic Research, Inc.
    4. Jérôme Adda & James Banks & Hans-Martin von Gaudecker, 2009. "The Impact of Income Shocks on Health: Evidence from Cohort Data," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1361-1399, December.
    5. Le Grand, Julian, 1991. "The distribution of health care revisited: A commentary on Wagstaff, van Doorslaer and Paci, and O'Donnell and Propper," Journal of Health Economics, Elsevier, vol. 10(2), pages 239-245, July.
    6. Lakdawalla, Darius & Zanjani, George, 2005. "Insurance, self-protection, and the economics of terrorism," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1891-1905, September.
    7. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1, June.
    8. Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-597, June.
    9. Le Grand, Julian, 1978. "The Distribution of Public Expenditure: The Case of Health Care," Economica, London School of Economics and Political Science, vol. 45(178), pages 125-142, May.
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    Citations

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    Cited by:

    1. Gerlinde Verbist & Michael Föster & Vaalavou, M., 2013. "GINI DP 74: The Impact of Publicly Provided Services on the Distribution of Resources: Review of New Results and Methods," GINI Discussion Papers 74, AIAS, Amsterdam Institute for Advanced Labour Studies.
    2. Christos Koutsampelas & Panos Tsakloglou, 2012. "The distribution of full income in Greece," University of Cyprus Working Papers in Economics 03-2012, University of Cyprus Department of Economics.
    3. Gabriella Berloffa & Sara Giunti, 2017. "Remittances and healthcare consumption: human capital investment or responses to shocks? Evidence from Peru," DEM Working Papers 2017/12, Department of Economics and Management.
    4. Christos Koutsampelas & Panos Tsakloglou, 2013. "The distribution of full income in Greece," International Journal of Social Economics, Emerald Group Publishing, vol. 40(4), pages 311-330, March.

    More about this item

    Keywords

    welfare cost; health; inequality;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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