2018 Fiscal Year Annual Research Report
Wealth-health inequality at Retirement: an Implication for a Social Security Reform
| Project/Area Number |
15K03505
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| Research Institution | National Graduate Institute for Policy Studies |
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Principal Investigator |
Porapakkarm P. 政策研究大学院大学, 政策研究科, 准教授 (10751266)
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| Project Period (FY) |
2015-04-01 – 2019-03-31
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| Keywords | medical spending / health insurance / wealth-health gradient / life-cycle models / lifetime inequality |
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| Outline of Annual Research Achievements |
Our research findings result in two academic papers. One is “Medical Spending in the US: Facts from the Medical Expenditure Panel Survey Dataset”, which was published in Fiscal Studies journal. The other titled “Lifetime Cost of Bad Health” is now circulated as NBER working paper no.23963 and is requested to resubmit at Review of Economic Studies journal.
In the first paper, we find that medical spending in the US is highly concentrated: the top 5% of spenders account for more than half of the total expenditure. This concentration decreases with age. In addition, the average medical spending of people in the bottom income quintile is higher than that of people in the top income quintile for all age groups. Our results show that medical expense or health risk is an important source of risk an individual faces over life course.
In the second paper we examine how health risk is linked to economic inequality, particular among people near retirement age. We find that, in fact, factors predetermined in early stage of life are very important in accounting for the link between health inequality and economic inequality in late adulthood. These factors explain 60% of the wealth-health inequality at retirement age. Our quantitative results also show that the difference in survival probability between the healthy and unhealthy is an important channel magnifying health induced inequality over the life-cycle.
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