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

40 Pages Posted: 4 Jan 2005

Multiple version iconThere are 4 versions of this paper

Date Written: December 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.

Keywords: Prescription drugs, elderly, social security, medicare

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 2004). Available at SSRN: https://ssrn.com/abstract=640982 or http://dx.doi.org/10.2139/ssrn.640982

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 ( email )

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