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The Impact of Health on Wealth: Empirical Evidence

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  • Ghimire, Umesh

Abstract

This paper empirically evaluates the impact of health on wealth among the adults between age 50 and 100 in the Unite States. Using the frailty index as a measure of health and carefully accounting for the dynamic relationship between frailty and health, I find that suffering one more health deficit leads, on average, to approximately 2.23 percent decline in the net worth of American households. The impact is significantly negative among the individuals over the age of 70, in poor health, in retirement, and without a college degree. The results are robust across several alternative definitions of wealth such as housing wealth, non-housing wealth, and financial wealth. I find that poor health has the largest impact on financial wealth and the smallest impact on housing wealth. The impact of wealth on frailty is insignificant.

Suggested Citation

  • Ghimire, Umesh, 2022. "The Impact of Health on Wealth: Empirical Evidence," MPRA Paper 113850, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:113850
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    More about this item

    Keywords

    Health; Wealth;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality

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