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Your Money or Your Life: Managing Health, Managing Money

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Abstract

Using the Panel Study of Income Dynamics, this paper examines the relationship between non-collateralized debt (NCD) and health behaviors. The results reveal that households whose members tend to lead less healthy lifestyles are more likely to hold NCD. There are three possible underlying hypotheses that may explain these relationships: (a) common factors, such as preferences, shaping both debt and poorer health behaviors; (b) poorer health and health behaviors causing debt; and (c) debt causing poorer health behaviors. Our findings are not consistent with a causal relationship between health behaviors and NCD. It is likely that other factors, such as time preferences, risk aversion and self-control may underlie the observed correlation.

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Notes

  1. Non-collateralized debt (NCD) includes credit card debt, student loans, medical or legal bills, loans from relatives, and other such debts.

  2. Additionally, the analysis of single men and single women subsamples was conducted. The results are available upon request. The subsample of single men is so small that the regression coefficients are not precisely estimated and it is difficult to draw any conclusions from these results. The subsample of single women is larger and gives more precise estimates. These results provide similar evidence with married couple subsample that is presented in this paper.

  3. Additionally, we have found that having serious health conditions, including stroke, hypertension, diabetes, cancer, lung disease, heart attack, heart disease, arthritis, and asthma does not predicted the onset of NCD. The estimates are available from the author upon request.

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Acknowledgements

Useful discussions with Frank Stafford, Charles Brown, Kerwin Charles, Julie Cullen, Alan Monheit, and Jeannette Rogowski are gratefully acknowledged. Comments from the participants of the University of Michigan Public Finance seminar, the Midwest Economic Association 2005 meeting, Southwestern Economics Association 2005 meeting, UMDNJ Health Economics Seminar and comments from the three anonymous reviewers are much appreciated. All remaining errors are those of the author.

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  1. Department of Health Systems and Policy, School of Public Health, University of Medicine and Dentistry of New Jersey, 335 George Street, Suite 2200, New Brunswick, NJ, 08903, USA

    Irina B. Grafova

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Correspondence to Irina B. Grafova.

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Grafova, I.B. Your Money or Your Life: Managing Health, Managing Money. J Fam Econ Iss 28, 285–303 (2007). https://doi.org/10.1007/s10834-007-9060-0

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