Exploring the Health-Wealth Nexus

34 Pages Posted: 8 Mar 2003 Last revised: 1 Nov 2010

See all articles by Jonathan Meer

Jonathan Meer

Texas A&M University - Department of Economics

Douglas L. Miller

University of California, Davis - Department of Economics

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: March 2003

Abstract

The casual links between health and economic resources have long concerned social scientists. We use four waves of data from the Panel Study of Income Dynamics to analyze the impact of wealth upon an individual's health status. The difficulty in approaching this task that has bedeviled previous studies is that wealth may be endogenous; a priori, it is just as likely that changes in health affect wealth as vice versa. We argue that inheritance is a suitable instrument for the change in wealth, and implement a straightforward instrumental variables strategy to deal with this problem. Our results suggest that the causal relationship running from wealth to health may not be as strong as first appears. In the data, wealth exerts a positive and statistically significant effect on health status, but it is very small in magnitude. Instrumental variables estimation leaves the point estimate approximately the same, but renders it insignificantly different from zero. And even when the point estimate is increased by twice its standard error, the quantitative effect is small. We conclude that the wealth-health connection is not driven by short run changes in wealth.

Suggested Citation

Meer, Jonathan and Miller, Douglas L. and Rosen, Harvey S., Exploring the Health-Wealth Nexus (March 2003). NBER Working Paper No. w9554, Available at SSRN: https://ssrn.com/abstract=386183

Jonathan Meer

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

Douglas L. Miller

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-8490 (Phone)

Harvey S. Rosen (Contact Author)

Princeton University - Department of Economics ( email )

001 Fisher Hall
Princeton, NJ 08544
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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