Seminarios

Abstract: A poorly understood but important way that economic conditions influence health is through the in- centives that they create for health investments. In this paper, we study how individuals’ current health investments respond to changes in expected future wealth, focusing on Chile’s 1981 public pension reform (shifting from a defined benefit to a defined contribution system). We compile detailed administrative pen- sion data linked to a rich household panel survey, and we then exploit discrete breaks in the reform’s impact on expected pension wealth across cohorts of Chileans using a fuzzy regression kink (RK) design to esti- mate how health investments (use of preventive screenings for major chronic diseases whose management is closely related to longevity, as well as healthy lifestyle behaviors) respond to changes in expected pen- sion wealth. Consistent with theoretical predictions, we find that greater expected pension wealth increases the use of preventive medical care (and to a lesser extent, promotes more costly healthy lifestyle behavior change), leading to measurable increases in chronic disease diagnoses in the Chilean population. More gen- erally, our results provide new empirical evidence of forward-looking behavior consistent with the life-cycle (Modigliani and Brumberg 1954) and permanent income (Friedman 1957) hypotheses.