The quantitatively large association between many measures of economic status and a variety of health outcomes appears to be pervasive over time and across countries at quite different levels of economic development. However, many analytical difficulties exist when one tries to understand the meaning of this association. These difficulties include the complex dimensionality of health status which produces considerable heterogeneity in health outcomes, the two-way interaction between health and economic status, and the separation of anticipated from unanticipated health or economic shocks. The emphasis in health research has been on understanding and disentangling the multiple ways in which socio-economic status many influence a variety of health outcomes. Consequently, much less is currently known about the impact health may have on SES. But for individuals middle aged and older, this health feedback to household income and wealth may be quantitatively quite important. Therefore, the aim of this project will be to estimate the effect of new health events on two central measures of household SES-wealth and income. One mechanism by which health shocks can affect wealth accumulation involves the incremental medical expenses associated with new health events. But medical expenses are by no means the only way health shocks can affect wealth accumulation. Most directly, healthier people may work longer hours in any given week and more weeks during a year leading to higher earnings. To estimate the impact of the onset of new health conditions, a parallel set of models will be estimated predicting total wealth accumulation, the components of household total net worth (e.g., financial or tangible wealth), total out of pocket medical expenses, total medical expenses, household income, labor supply, and the intentions to leave bequests.
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