Project Management

Health Shocks, Insurance Status And Net Worth: Intra- And Inter-Generational Effects

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Executive Summary

An extensive literature has documented a robust correlation between socioeconomic status - measured in a variety of ways - and health outcomes; however, much uncertainty remains regarding what causal processes underlie this association. The present paper builds on a growing literature that seeks to better document how and why wealth and SES are related. Specifically, the authors ask the extent to which health shocks affect net worth - a less-studied dimension of socioeconomic status. Given a lack of instruments that meet the exclusion restriction, they use data from the Panel Study of Income Dynamics to pursue a first-differences identification strategy. They estimate a parameter for acute illnesses and compare this coefficient to a counterfactual parameter for the presence of chronic illnesses.

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