The Impact of Health on Wealth: Empirical Evidence

Umesh Ghimire ()

No 2020-19, Working papers from University of Connecticut, Department of Economics

Abstract: This paper empirically evaluates the impact of health on wealth. Using the frailty index as a measure of health and carefully accounting for the dynamic relationship between frailty and wealth, I find that su˙ering one more health deficit leads, on average, to a 2.45 percent decline in the household net worth of individuals between age 50 and 100. The household net worth of individuals with no college degree, poor health, and over the age of 70 is significantly negatively a˙ected by poor health. The results pass the tests of instrument validity and are consistent across several alternative definitions of wealth. Using financial net worth as a definition of wealth, I find that the average impact of frailty on wealth is the largest, while it is the smallest when wealth is defined to include only housing net worth.

Keywords: Wealth; Health (search for similar items in EconPapers)
JEL-codes: D31 I14 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2020-12
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2020-19

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