The Impact of Health Insurance on Stockholding: A Regression Discontinuity Approach
40 Pages Posted: 22 Nov 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