Discussion paper

DP12562 Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations

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.

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Citation

Schwandt, H (2018), “DP12562 Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations”, CEPR Press Discussion Paper No. 12562. https://cepr.org/publications/dp12562