Does health affect portfolio choice?

Health Economics
David A Love, Paul A Smith

Abstract

A number of recent studies find that poor health is empirically associated with a safer portfolio allocation. It is difficult to say, however, whether this relationship is truly causal. Both health status and portfolio choice are influenced by unobserved characteristics such as risk attitudes, impatience, information, and motivation, and these unobserved factors, if not adequately controlled for, can induce significant bias in the estimates of asset demand equations. Using the 1992-2006 waves of the Health and Retirement Study, we investigate how much of the connection between health and portfolio choice is causal and how much is due to the effects of unobserved heterogeneity. Accounting for unobserved heterogeneity with fixed effects and correlated random effects models, we find that health does not appear to significantly affect portfolio choice among single households. For married households, we find a small effect (about 2-3 percentage points) from being in the lowest of five self-reported health categories.

References

Mar 22, 2008·The Journal of Clinical Investigation·E William St Clair
Jun 3, 2008·Journal of Health Economics·Pierre-Carl Michaud, Arthur van Soest
Oct 23, 2010·Molecular Cell·Alberto Ciccia, Stephen J Elledge

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Citations

May 1, 2012·Journal of Banking & Finance·Vincenzo AtellaNicole Maestas
Sep 3, 2013·Journal of Applied Econometrics·Dana Goldman, Nicole Maestas
Aug 30, 2017·Health Economics·Vicki L Bogan, Angela R Fertig
Feb 27, 2015·Journal of Complementary & Integrative Medicine·Subhadip BanerjeePratip K Debnath
Feb 27, 2021·Health Economics·Zhongda LiYubing Sui
Aug 13, 2021·Health Economics·Marc-André LuikDennis Wesselbaum

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