Income and the use of prescription drugs by the elderly: Evidence from the notch cohorts

John R. Moran, Kosali Ilayperuma Simon

Research output: Contribution to journalArticlepeer-review

17 Scopus citations

Abstract

We use exogenous variation in Social Security payments created by the Social Security benefits notch to estimate how retirees' use of prescription medications responds to changes in their incomes. Using data from the 1993 Wave of the AHEAD, we obtain instrumental variables estimates of the income elasticity of prescription drug use that are uniformly above one, with a middle estimate of 1.32. Simulations based on our estimates suggest that reductions in Social Security benefits similar to those incorporated in recent reform proposals would significantly reduce prescription drug use among the elderly.

Original languageEnglish (US)
Pages (from-to)411-432
Number of pages22
JournalJournal of Human Resources
Volume41
Issue number2
DOIs
StatePublished - 2006

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Strategy and Management
  • Organizational Behavior and Human Resource Management
  • Management of Technology and Innovation

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