More to Live for: Health Investment Responses to Expected Retirement Wealth in Chile
An important but poorly understood way that economic development may influence health is through the private incentives that it creates for individuals to invest in their own health. In this paper, we study how individuals' forward-looking health investments respond to changes in expected future (but not current) wealth. Focusing on institutional features of Chile's public pension overhaul in 1981, we link administrative microdata to a detailed household panel survey, and we then exploit discrete breaks in the resulting cohort pension wealth profile using a fuzzy regression kink design (RKD). Although theoretically ambiguous, empirically we find that greater expected pension wealth increases the use of important preventive medical care (and to a lesser extent, promotes more costly healthy lifestyle behaviors) – leading to measurable increases in chronic disease diagnosis (a requisite for appropriate disease management), reductions in disease prevalence, and measurably lower mortality in old age (particularly due to chronic diseases). In general, these results provide new evidence that economic development can have a meaningful incentive effect on health.
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