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 in the short and long run, using Social Security Survivors Benefits as our setting. Exploiting the age-60 eligibility threshold, we use a fuzzy regression discontinuity design and data from the Health and Retirement Study to show that benefit eligibility lowers self-reported health and increases diagnosed heart disease and diabetes. We find little evidence of changes in health behaviors or food spending. Instead, eligibility increases out-of-pocket medical spending and prescription drug use, consistent with benefits relaxing liquidity constraints on medical care and bringing previously undiagnosed conditions to clinical attention. We then exploit the 1965 reform that lowered the earliest eligibility age for reduced widow benefits from 62 to 60. Survival to age 70 increased more rapidly among birth cohorts more exposed to the reform, with no comparable pattern in Canada, while all-cause mortality declined more steeply in states with larger widow populations. Taken together, the short-run rise in diagnosed illness is consistent with greater detection through expanded access to care, and greater exposure to benefits is associated with improved survival in the long run.