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

John R. Moran and Kosali Simon ()

No 66, Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University

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 implications of changes in transfer payments to the elderly and for evaluating the benefits of the recently enacted Medicare prescription drug benefit.

JEL-codes: I12 J14 (search for similar items in EconPapers)
Date: 2004-12
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More papers in Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University 426 Eggers Hall, Syracuse, New York USA 13244-1020. Contact information at EDIRC.
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