@article{58d766fbe07545df80cd5f3248054e40,
title = "Health and consumption preferences; estimating the health state dependence of utility using equivalence scales",
abstract = "This paper estimates health state dependence of utility in Europe. For identification we introduce a new method using insights from the research domain of living standards. We estimate how much extra (or less) income is needed to maintain the same level of material wellbeing after a health shock, and we derive a simple relation between this estimate and the health state dependence parameter. The results show positive health state dependence. This is not driven by medical expenditures, and is robust across alternative specifications and health measures. Interestingly, for cognitive limitations we find negative health state dependence, presumably resulting from a decreased ability to plan.",
keywords = "Consumption, Financial satisfaction, Health",
author = "Lieke Kools and Marike Knoef",
note = "Funding Information: The authors thank the Network for Studies on Pensions, Aging and Retirement (Netspar) and Instituut Gak for financial support. Furthermore we thank Rob Alessie, Clementine Garrouste, Arie Kapteyn, Tabea Bucher-Koenen, Irene Ferrari, Luigi Pistaferri, Arthur van Soest, Bas Werker, Joachim Winter, two anonymous referees, and participants of the Dutch Economist Day 2014, ESPE conference 2015, International Panel Data Conference 2015, Pension Workshop Paris 2015, Winter School on Inequality and Welfare 2016, Quantitative Society for Pensions and Saving Workshop 2016, EEA-ESEM 2016 and seminars at CPB, Netspar (2017) and the Munich Center for the Economics of Aging (2017). Declarations of interest: none. Publisher Copyright: {\textcopyright} 2019 Elsevier B.V.",
year = "2019",
month = apr,
doi = "10.1016/j.euroecorev.2018.12.007",
language = "English",
volume = "113",
pages = "46--62",
journal = "European Economic Review",
issn = "0014-2921",
publisher = "Elsevier B.V.",
}