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

41 Pages Posted: 16 Feb 2005 Last revised: 13 Aug 2009

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: January 2005

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 care usage implications of any changes in transfer payments to the elderly that may occur in the future, and for evaluating the benefits of the recently enacted Medicare prescription drug benefit.

Suggested Citation

Moran, John R. and Simon, Kosali Ilayperuma, Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts (January 2005). NBER Working Paper No. w11068. Available at SSRN: https://ssrn.com/abstract=652986

John R. Moran

Penn State University ( email )

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

Kosali Ilayperuma Simon (Contact Author)

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

Register to save articles to
your library

Register

Paper statistics

Downloads
39
Abstract Views
828
PlumX Metrics