Working Paper: CEPR ID: DP12562
Authors: Hannes Schwandt
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 naturalexperiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the 1998-2011 Health andRetirement 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.
Keywords: Wealth shocks; Health; Mortality; Stock market; Retirees
JEL Codes: G10; I10; J14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Wealth shocks (G59) | Health outcomes (I14) |
| 10% loss in wealth (G59) | Impairment in physical health, mental health, and survival rates (I12) |
| 10% loss in wealth (G59) | Development of additional health condition (I12) |
| 10% loss in wealth (G59) | Non-survival in subsequent two years (C41) |
| Wealth shocks (G59) | High blood pressure (I19) |
| Wealth shocks (G59) | Heart disease (I12) |
| Wealth shocks (G59) | Arthritis, diabetes, lung diseases (I12) |