Health and Financial Strain: Evidence from the Survey of Consumer Finances

• Published in: Southern economic journal Vol. 71; no. 4; pp. 873 - 890
• Main Authors: Lyons, Angela C., Yilmazer, Tansel
• Format: Journal Article
• Language: English
• Published: Stillwater Southern Economic Association 01-04-2005
• Subjects: Asset income; Consumer behavior; Consumption; Correlation analysis; Debt; Delinquency; Economic models; Economic theory; Economics; Health; Health care; Health insurance; Health status; Health surveys; Households; Liquid assets; Low income groups; Measurement; Mental disorders; Negative income; Personal debt; Personal finance; Poor; Self reports; Social classes; Socioeconomic factors; Socioeconomic status; Stress (Psychology); Studies; Surveys; Utility functions; Wealth; United States
• ISSN: 0038-4038; 2325-8012
• DOI: 10.1002/j.2325-8012.2005.tb00681.x

Using data from the Survey of Consumer Finances, this study examines the relationship between health status and financial strain controlling for the dual endogeneity between the two factors. Simultaneous two-stage probit models are estimated for self-reported health status and three measures of financial strain. The results from all three models indicate that poor health significantly increases the probability of financial strain. There is little evidence that financial strain contributes to poor health. The findings suggest that severe health conditions may result in larger financial burdens while large financial burdens are unlikely to accelerate a decline in health status. In the end, health may be contributing to widening financial disparities, especially among the poor who are in poor health.