The Impact of Health on Wealth: Empirical Evidence

Ghimire, Umesh (2022): The Impact of Health on Wealth: Empirical Evidence.

Abstract

This paper empirically evaluates the impact of health on wealth among the adults between age 50 and 100 in the Unite States. Using the frailty index as a measure of health and carefully accounting for the dynamic relationship between frailty and health, I find that suffering one more health deficit leads, on average, to approximately 2.23 percent decline in the net worth of American households. The impact is significantly negative among the individuals over the age of 70, in poor health, in retirement, and without a college degree. The results are robust across several alternative definitions of wealth such as housing wealth, non-housing wealth, and financial wealth. I find that poor health has the largest impact on financial wealth and the smallest impact on housing wealth. The impact of wealth on frailty is insignificant.

• Item Type: MPRA Paper
• Language: English
• Keywords: Health, Wealth
• Subjects: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; I - Health, Education, and Welfare > I1 - Health > I14 - Health and Inequality

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