Health and income: testing for causality on European elderly people

Amélie Adeline and Eric Delattre (amelie.adeline@u-cergy.fr)
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Eric Delattre: Université de Cergy-Pontoise, THEMA

No 2018-07, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: Socioeconomic status and health are positively related, also known as the "healthincome gradient". However, when considering the causal impact of income on health, the reverse causality might be at play. Income inequalities are an important factor in health inequality such that policy makers who aim at improving general health or narrowing inequalities using public policies, need to understand the sources and the direction of the causality between income and health. We thus investigate bivariate causal effects between the two by highlighting the Granger causality. Using the Survey of Health, Aging and Retirement in Europe (SHARE), we find evidence of persistent causal effects running from income to health and from health to income. Results, using a Full Information Maximum Likelihood estimator (FIML), suggest that considering a simultaneous equations approach is required because there are unobservable factors common to both equations in the individual e ects (statistically significant correlation between the two equations).

Keywords: Granger causality; income; simultaneity; self-assessed health; FIML. (search for similar items in EconPapers)
JEL-codes: C32 C33 D31 I10 J14 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-age, nep-ets, nep-eur and nep-knm
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2018-07

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