The Impact of Income Shocks on Health: Evidence from Cohort Data

35 Pages Posted: 3 Nov 2008

See all articles by Jerome Adda

Jerome Adda

University College London - Department of Economics; Institute for Fiscal Studies (IFS)

James W. Banks

Institute for Fiscal Studies; University of Manchester

Hans-Martin von Gaudecker

University of Bonn - Economic Science Area; Netspar; Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

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Abstract

We study the effect of permanent income innovations on health for a prime-aged population. Using information on more than half a million individuals sampled over a twenty-five year period in three different cross-sectional surveys we aggregate data by date-of-birth cohort to construct a synthetic cohort dataset with details of income, expenditure, socio-demographic factors, health outcomes and selected risk factors. We then exploit structural and arguably exogenous changes in cohort incomes over the eighties and nineties to uncover causal effects of permanent income shocks on health. We find that such income innovations have little effects on a wide range of health measures, but do lead to increases in mortality and risky health behaviour.

Keywords: income shocks, health

JEL Classification: I1, J3

Suggested Citation

Adda, Jerome and Banks, James W. and von Gaudecker, Hans-Martin, The Impact of Income Shocks on Health: Evidence from Cohort Data. IZA Discussion Paper No. 3329, Available at SSRN: https://ssrn.com/abstract=1294522 or http://dx.doi.org/10.2139/ssrn.1294522

Jerome Adda (Contact Author)

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

James W. Banks

Institute for Fiscal Studies ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

University of Manchester

Oxford Road
Manchester, N/A M13 9PL
United Kingdom

Hans-Martin Von Gaudecker

University of Bonn - Economic Science Area ( email )

Adenauerallee 24-42
D-53113 Bonn
Germany

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

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