Work

The effect of health on the marginal utility of consumption: Evidence based on household consumption expenditure

Year: 2024

Type: article

Abstract: This study applies broad-based measures of household consumption expenditure and a utility proxy to estimate the effect of health on the marginal utility of consumption using the Russia Longitudinal Monitoring Survey covering 1994-2019. To do so, I estimate how an observed within-individual utility change associated with a health shock varies across individuals of different permanent consumption levels. The results show that the marginal utility of consumption increases as health deteriorates. The baseline estimates show that moving from a healthy state to a poor health state raises the marginal utility of consumption by about 4 percentage points. This finding implies that consumption buffers the negative effects of a health shock on well-being.

Source: Journal of Economic Behavior & Organization

DOI: 10.1016/j.jebo.2024.106809

Author: Silas Amo-Agyei

Institution: University of Lausanne

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Good health and well-being

Open Access status: hybrid

Estimated APC paid: $2,770