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Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations

Hannes Schwandt

American Economic Journal: Applied Economics, 2018, vol. 10, issue 4, 349-77

Abstract: Do wealth shocks affect the health of elderly in developed countries? I exploit the booms and busts in the US stock market as a natural experiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the 1998–2011 Health and Retirement Study I construct wealth shocks as the interaction of stock holdings with stock market changes. These wealth shocks predict wealth changes and strongly affect health outcomes. A 10% wealth loss leads to an impairment of 2–3% of a standard deviation in physical health, mental health and survival rates.

JEL-codes: D14 G11 G14 I12 J14 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/app.20140499
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