Heterogeneous Health Groups and the Dynamics of the Elderly

40 Pages Posted: 19 Aug 2019

See all articles by Dante Amengual

Dante Amengual

Centre for Monetary and Financial Studies (CEMFI)

Jesus Bueren

European University Institute

Julio A. Crego

Tilburg University

Date Written: May 16, 2019

Abstract

We propose a novel methodology to classify individuals into groups of health and characterize their transition across these groups as they age. We use MCMC techniques to estimate a panel Markov switching model that exploits information from both the cross- sectional and time series dimensions. Using the Health and Retirement Study, we identify four clearly differentiated and persistent health groups, depending on individual’s physical and mental disabilities, with heterogeneous transitions across gender and education. Our classification outperforms existing measures of health used in the literature at explaining entry in nursing homes, home health care, out-of-pocket medical expenses, and mortality.

Keywords: Latent groups, Frailty, Long-Term Care, Medical expenses

JEL Classification: C23, C38, E21, I14

Suggested Citation

Amengual, Dante and Bueren, Jesus and Crego, Julio, Heterogeneous Health Groups and the Dynamics of the Elderly (May 16, 2019). Available at SSRN: https://ssrn.com/abstract=3438104 or http://dx.doi.org/10.2139/ssrn.3438104

Dante Amengual

Centre for Monetary and Financial Studies (CEMFI) ( email )

Casado del Alisal 5
28014 Madrid
Spain

Jesus Bueren

European University Institute ( email )

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014
Italy

Julio Crego (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

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