Does money buy better health? Unpacking the income to health association after midlife

Abstract

This article estimates the effect of household financial resources on health after midlife using models that minimize health-related selectivity and unobserved heterogeneity bias. I focus on the self-rated health and mobility limitations of adults transitioning into retirement over six panels of the Health and Retirement Study (1992–2002; age 51–61 at wave one; N = 7602). Standard regression models that adjust for health-related selection with prospective and retrospective controls suggest a significant influence of long-term income on health, but an insignificant influence of short-term income. Further adjustment for unobserved fixed effects also suggests that short-term income is insignificant. Sizable recent and long-term health feedbacks to income for a portion of the HRS respondents underscore the need to control for the confounding influence of health over the lifecourse. Together these results suggest that adults after midlife are heterogeneous with respect to the causal and selective processes generating the observed association between income and health.