|Title||Essays on Health and Household Finances|
|Year of Publication||2006|
|Keywords||Health Conditions and Status, Net Worth and Assets|
This dissertation consists of three essays on the economics of health and household finances. The first essay investigates how subjective mortality expectations and heterogeneity in time and risk preferences affect the consumption and saving behaviors of the elderly. This study uses data on information about preferences and subjective mortality expectations from the Health and Retirement Study merged with detailed consumption data from two waves of the Consumption and Activities Mail Survey. The main results are: (1) consumption and saving choices vary with subjective mortality rates and reported time and risk preferences in a way that is consistent with the life cycle model; and (2) there is substantial heterogeneity in the estimated time discount rates and risk aversion parameters. The second essay examines the effect of job loss on health for near elderly employees. It uses longitudinal data from the Health and Retirement Study. Job loss is a major cause of economic insecurity for working age individuals, and can cause a reduction in income and loss of health insurance. To control for possible reverse causality, this study focuses on people who were laid off for an exogenous reason - the closure of their previous employers' business. This study finds no causal effect of exogenous job loss on various measures of health, which suggests that poor health of the unemployed can be explained by reverse causality. Instrumental variables regressions are used to estimate the effect of loss of health insurance, loss of income, and re-employment on health, and again there are no statistically significant effects. The third essay examines the welfare effects of tax subsidies for insurance premiums in a model of an insurance market with private information. This study finds that any second-best equilibrium can be achieved for some rate of a proportional premium subsidy. These second-best outcomes can typically not be achieved in a private insurance market without subsidies. This result suggests that subsidies for health insurance contributions, such as the tax deduction for employers' health insurance contribution in the United States, can mitigate the effects of adverse selection in health insurance markets.
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|Short Title||Essays on Health and Household Finances|