More to Live for: Health Investment Responses to Expected Retirement Wealth in Chile
Abstract: 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 Chile's public pension overhaul in 1981, we link administrative microdata to a detailed household panel survey, exploiting discrete breaks in the reform's impact across cohorts using a fuzzy regression kink design (RKD). Consistent with theoretical predictions, we find that greater expected pension wealth increases the use of important preventive medical services (and to a lesser extent, promotes more costly healthy lifestyle behavior change) -- leading to measurable increases in chronic disease diagnosis (a requisite for appropriate disease management), reductions in disease prevalence, and measurably lower mortality (particularly due to chronic diseases). In general, these results provide new evidence that economic development can have a meaningful incentive effect on health.
NBER Working Paper 34249, 2025 (With Nieve Valdes and Marcos Vera-Hernandez)