RT Journal Article
SR Electronic
T1 Income and the Use of Prescription Drugs by the Elderly
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 411
OP 432
DO 10.3368/jhr.XLI.2.411
VO XLI
IS 2
A1 Moran, John R.
A1 Simon, Kosali Ilayperuma
YR 2006
UL http://jhr.uwpress.org/content/XLI/2/411.abstract
AB 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.