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

John R. Moran and Kosali Simon

No 11068, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: I12 I18 (search for similar items in EconPapers)
Date: 2005-01
New Economics Papers: this item is included in nep-hea
Note: AG EH
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Citations: View citations in EconPapers (4)

Published as Moran, J. and K. Simon 2006. “Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts.” Journal of Human Resources 41, 2 (February 2006): 411–432.

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Working Paper: Income and the Use of Prescription Drugs by the Elderly: Evidence from the Notch Cohorts (2004)
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