The Impact of Health Insurance on Stockholding: A Regression Discontinuity Approach
CFS Working Paper No. 488
44 Pages Posted: 12 Nov 2014 Last revised: 31 Jan 2017
Date Written: November 9, 2014
Using data from the US Health and Retirement Study, we study the causal effect of increased health insurance coverage through Medicare and the associated reduction in health-related background risk on financial risk-taking. Given the onset of Medicare at age 65, we identify our effect of interest using a regression discontinuity approach. We find that getting Medicare coverage induces stockholding for those with at least some college education, but not for their less-educated counterparts. Hence, our results indicate that a reduction in background risk induces financial risk-taking in individuals for whom informational and pecuniary stock market participation costs are relatively low.
Keywords: Health Insurance, Medicare, Stockholding, Regression Discontinuity, Household Finance
JEL Classification: D14, I13, G11
Suggested Citation: Suggested Citation