Household Portfolio Choices, Health status and Health Care Systems A Cross-Country Analysis Based on SHARE

Vincenzo Atella, Marianna Brunetti and Nicole Maestas (maestas@rand.org)
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Nicole Maestas: RAND

No 183, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: Health risk is increasingly viewed as an important form of background risk that affects household portfolio decisions. However, its role might be mediated by the presence of a protective full-coverage National Health System that could reduce households’ probability of incurring current and future out-of-pocket medical expenditures. In this paper, we first sketch a theoretical framework in which household portfolio decisions are a function of both individual and systemic characteristics. Then, we test its main implications based on SHARE data, studying the influence of current health status and future health risk on the decision to hold risky assets, across 10 European countries with different health care systems, each offering a different degree of protection against out-of-pocket medical expenditures. We find robust empirical confirmation of our model implications, since perceived health condition matters more than objective health condition and, consistent with the theoretical underpinnings of background risk, health risk affects portfolio choices only in countries with less protective healthcare systems. Furthermore, portfolio decisions consistent with background risk models are observed only with respect to middle-aged and highlyeducated investors.

Keywords: Household portfolios; health status; national health care systems (search for similar items in EconPapers)
JEL-codes: D8 E2 G1 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2011-01-21, Revised 2011-01-21
New Economics Papers: this item is included in nep-eur and nep-hea
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Household portfolio choices, health status and health care systems: A cross-country analysis based on SHARE (2012)
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