Economics - General Medical Studies

Money and Health

Ten days ago, MedPageToday ran an article (“Hefty Bank Account…“) which claimed that people who have more money are healthier.  Using the 2000 Census American Community Survey, the study finds that “a 55-year-old man making about $49,500 per year is 44% more likely to have a functional disability than his neighbor making $57,800 a year.”  This finding is entirely believable, yet does not really tell us what we want to know: what is causing good or bad health?

Does more money enable an individual to purchase better health care and thus increase the probability of desireable health outcomes?  Is increased earning power an indicator for socio-economic status, better education, etc. which may lead people to adopt healthier life-styles?  It is also possible to find reverse causality here where people who are ill are less productive at work and thus earn less.  The authors of the study even admit that since their data is cross-section, their study is not able to determine the direction of causality.  If the investigators used panel data, their study could track the individuals over time and see what are the major causes of their illnesses.