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Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations

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  • Schwandt, Hannes
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.

Suggested Citation

  • Schwandt, Hannes, 2018. "Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations," CEPR Discussion Papers 12562, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:12562
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    More about this item

    Keywords

    Wealth shocks; Health; Mortality; stock market; Retirees;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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