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The Impact of Health on Wealth: Empirical Evidence
By Umesh Ghimire
This paper empirically evaluates the impact of health on wealth among adults between the ages of 50 and 100 in the United States. Using the frailty index to measure health status and carefully accounting for the dynamic relationship between frailty and wealth, I find that suffering one more health deficit leads, on average, to approximately 2.23 percent decline in the net worth of American households. The impact is concentrated among individuals over the age of 70, in poor health, in retirement, and without a college degree. The results are robust across alternative definitions of wealth such as housing wealth, non-housing wealth, and financial wealth. I find that poor health has the biggest impact on financial wealth and the smallest impact on housing wealth. The impact of wealth on health is statistically insignificant.
Source: @SSRN
