The Lifetime Costs of Bad Health

Mariacristina De Nardi, Svetlana Pashchenko and Ponpoje Porapakkarm

MPRA Paper from University Library of Munich, Germany

Abstract: What generates the observed differences in economic outcomes by health? How costly it is to be unhealthy? We show that health dynamics are largely driven by ex-ante fixed heterogeneity, or health types, even when controlling for one’s past health history. In fact, health types are the key driver of long spells of bad health. We incorporate these rich health dynamics in an estimated structural model and show that health types and their correlation with other fixed characteristics are important to account for the observed gap in economic outcomes by health. Monetary and welfare losses due to bad health over the life cycle are large, concentrated, and to a large extent due to factors pre-determined earlier in life. A large portion of the related monetary costs is due to income losses, especially for people of working age, while a substantial portion of the welfare losses arises because health affects life expectancy.

Keywords: health; health insurance; medical spending; wealth-health gradient; life-cycle models (search for similar items in EconPapers)
JEL-codes: E21 I14 (search for similar items in EconPapers)
Date: 2022-03-19
New Economics Papers: this item is included in nep-dge, nep-hea, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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https://mpra.ub.uni-muenchen.de/112492/1/MPRA_paper_112492.pdf original version (application/pdf)

Related works:
Working Paper: The Lifetime Costs of Bad Health (2017)
Working Paper: The Lifetime Costs of Bad Health (2017)
Working Paper: The Lifetime Costs of Bad Health (2017)
Working Paper: The Lifetime Costs of Bad Health (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:112492

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