The Role of Decision Making Processes in the Correlation Between Wealth and Health

46 Pages Posted: 27 Dec 2010

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2010

Abstract

There are many pathways explaining the relationship between socioeconomic status and health; one possibility is that some normally unobservable characteristic causes people to invest both in their financial well-being and their health. Here we consider the possibility that the decision making processes are similar across domains and that the steps individuals take to make decisions can help to explain the correlation in outcomes across domains. We focus particularly on retirement savings decisions and decisions in the health domain. Choices in both domains have long-term consequences and therefore require foresight and the ability to process complex information. Our results suggest that up to 44% of the correlation between wealth and health is due to the processes that people use to make these choices.

Keywords: health, wealth, decision making

JEL Classification: I12, D14

Suggested Citation

Binswanger, Johannes and Carman, Katherine Grace, The Role of Decision Making Processes in the Correlation Between Wealth and Health (December 1, 2010). Netspar Discussion Paper No. 12/2010-081. Available at SSRN: https://ssrn.com/abstract=1730658 or http://dx.doi.org/10.2139/ssrn.1730658

Johannes Binswanger

University of St. Gallen ( email )

Dufourstrasse 50
St.Gallen, CH-9000
Switzerland

Katherine Grace Carman (Contact Author)

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

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