When Income Support Hurts and Helps: Health Effects of Survivors Benefits
Job Market Paper, Reject & Resubmit, Journal of Health Economics; Coauthor: Qilu Pan
- This paper explores how income support after widowhood affects health over the life cycle, using Social Security Survivors Benefits as our setting. Using a fuzzy regression discontinuity design at the age-60 eligibility threshold and panel data from the Health and Retirement Study. Found that eligibility worsens self-reported health and increases diabetes in the short run. These effects are concentrated among widows who retire before age 60 and are most financially dependent on benefits. Mechanism analyses point to a consumption channel: the arrival of cash at eligibility relaxes a binding liquidity constraint, inducing a transitory increase in food expenditures that temporarily elevates metabolic risk. However, over the years following eligibility, depression scores improve and hospital admissions increase, suggesting that sustained benefit receipt reduces financial stress and expands access to care. Exploiting the 1965 reform that lowered the earliest eligibility age from 65 to 60, we find consistent evidence that expanded eligibility improves survival to age 70, with mortality declines concentrated in cardiovascular disease, tuberculosis, and suicide. Income support thus generates short-run health risks while improving longer-run survival.