Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts

Syracuse University Center for Policy Research Working Paper No. 66

43 Pages Posted: 18 Apr 2011

See all articles by John R. Moran

John R. Moran

Penn State University

Kosali Ilayperuma Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA); National Bureau of Economic Research (NBER)

Multiple version iconThere are 4 versions of this paper

Date Written: December 1, 2004

Abstract

We use exogenous variation in Social Security payments created by the Social Security benefits notch to estimate how retirees’ use of prescription medications responds to changes in their incomes. In contrast to estimates obtained using ordinary least squares, instrumental variables estimates based on the notch suggest that lower-income retirees exhibit considerable income sensitivity in their use of prescription drugs. Our estimates are potentially useful for thinking about the health implications of changes in transfer payments to the elderly and for evaluating the benefits of the recently enacted Medicare prescription drug benefit.

JEL Classification: I12, J14

Suggested Citation

Moran, John R. and Simon, Kosali Ilayperuma, Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts (December 1, 2004). Syracuse University Center for Policy Research Working Paper No. 66. Available at SSRN: https://ssrn.com/abstract=1813993 or http://dx.doi.org/10.2139/ssrn.1813993

John R. Moran (Contact Author)

Penn State University ( email )

116 Henderson Bldg.
Penn State University
University Park, PA 16802
United States

Kosali Ilayperuma Simon

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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