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Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations


Schwandt, Hannes (2018). Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations. American Economic Journal: Applied Economics, 10(4):349-377.

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 natural experiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the 1998–2011 Health and Retirement 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.

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 natural experiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the 1998–2011 Health and Retirement 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.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:06 Faculty of Arts > Jacobs Center for Productive Youth Development
Dewey Decimal Classification:370 Education
Language:English
Date:1 October 2018
Deposited On:25 Sep 2019 12:05
Last Modified:25 Sep 2019 12:06
Publisher:American Economic Association
ISSN:1945-7790
OA Status:Green
Publisher DOI:https://doi.org/10.1257/app.20140499
Related URLs:https://www.zora.uzh.ch/id/eprint/138767/

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