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The Lifetime Costs of Bad Health

Mariacristina De Nardi (), Svetlana Pashchenko () and Ponpoje Porapakkarm ()

No 23963, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: What are the cumulative effects of health shocks over the life-cycle? The answer depends on the nature of persistence of bad health and the extent to which it changes individuals' economic circumstances. We measure the lifetime costs of bad health using a rich structural model that can reproduce the short- and long-run dynamics of health and health-related inequality in economic outcomes. We explicitly take into account the fact that this inequality can be partly traced back to factors predetermined early in life. Our model has several implications concerning the pecuniary and non-pecuniary effects of health shocks. The life- time costs of bad health are influenced by ex-ante predetermined factors, and the largest component of pecuniary costs is the loss in labor earnings. Because bad health lowers ones' life expectancy, its non-pecuniary effects are large. In particular, through this channel they are very important for individuals' welfare and non-trivially contribute toward lifetime inequality.

JEL-codes: E21 H31 I14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-hea and nep-mac
Date: 2017-10
Note: PE
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Working Paper: The Lifetime Costs of Bad Health (2017) Downloads
Working Paper: The Lifetime Costs of Bad Health (2017) Downloads
Working Paper: The Lifetime Costs of Bad Health (2017) Downloads
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