Essays on the effect of health on household spending, labor market outcomes, and charitable contributions of money and time
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These essays examine topics in health economics using the Panel Study of Income Dynamics. The first chapter analyzes the relationship between individuals‘ mental health status and their spending behavior. I find that the effect of mental illness on spending varies by the measure of mental illness, by the expenditure category, and by gender, age, income, and couple status. In general, the effect of severe forms of mental illness on spending is negative and appears to be strongest for older single women with low incomes. However, my results also indicate some specific evidence of retail therapy involving women and food, and husbands and cars. In the second chapter, I analyze the effects of mental illness on labor market outcomes for single men, single women, married men, and married women. Findings from the estimation of a reduced-form earnings equation indicate a negative relationship between weekly earnings and mental illnesses for all groups. However, when I condition on hours worked, there is no effect of mental illness on the hourly wage rate for men, suggesting that the negative effects of mental illness on weekly earnings result from reduced work hours. Mentally ill single women experience a 21.5 percent lower hourly wage rate (conditional on labor supply), the most severe adverse effect of mental illness on labor market outcomes among all groups. The third chapter examines the association between individuals‘ health status and their philanthropic behavior. In particular, I examine whether changes in health affect monetary giving and volunteering, and in addition, whether changes in health direct philanthropy to charities promoting health. Empirical estimates from the fixed effects models show that health shocks (stroke, heart attack or cancer diagnosis) and mental health diagnoses are associated with a decline in total money and/or time donations. However, health shocks, mental health diagnoses, and declines in self-reported physical health status are associated with a rise in time and/or money donations to health-related charities. Thus my empirical results indicate that health may have an important effect on where donations are directed.