Health after Wealth Shocks

Does wealth affect the health of the elderly in Europe? To answer this question, this project uses unexpected wealth shocks, constructed from stock market fluctuations and household’s stock market participation. We estimate the impact of the shocks on different dimensions of health and well-being. Our sample of elderly households drawn from the Survey of Health, Aging and Retirement in Europe (SHARE) from 2004 to 2017 allows us to contribute to the literature by exploiting a wide variety of institutional settings, providing first estimates for households that were recently shown to differ strongly from their US-American counterparts with regards to their portfolio allocations. Moreover, in light of the demographic change and the shift of responsibility to households, the analysis contributes to the political debate in European countries by exploring the underappreciated channel of health consequences from an increasing reliance on retired households on the stock market.