Consequences and Predictors of New Health Events

There is renewed interest in why people of lower socioeconomic status (SES) have worse health outcomes. No matter which measures of SES are used (income, wealth, or education), the evidence that this association is large is abundant (Marmot 1999; Smith 1999). The relation between SES and health appears also to be pervasive over time and across countries at quite different levels of economic development (Kitagawa and Hauser 1973; Townsend et al. 1988). Considerable debate remains about why the relation arises and what the principal directions of causation might be (Smith 1999; Adams et al. 2003; Deaton 2003). However, many analytical difficulties exist when one tries to understand its meaning. These difficulties include the complex dimensionality of health status that produces considerable heterogeneity in health outcomes, the two-way interaction between health and economic status, and the separation of anticipated from unanticipated health or economic shocks. The emphasis in health research has been on understanding and disentangling the multiple ways in which socioeconomic status may influence a variety of health outcomes. Consequently, much less is currently known about the impact health may have on SES. But at least for working-aged individuals, health feedbacks to labor supply, household income, and wealth may be quantitatively quite important. Therefore, one aim of this paper will be to estimate the effect of new health events on a series of subsequent outcomes that are both directly and indirectly related to SES. These outcomes will include out-of-pocket (OOP) medical expenses, the intensive 7 Consequences and Predictors of New Health Events