Household finances of older adults and their association with health and quality of life

The financial situation of a household and the health of its members are closely interconnected. Although the literature identifies links between health and finances, existing studies typically explore only one direction of this relationship—either the effect of health on financial status or, conversely, the effect of financial status on health. However, there is a lack of research investigating the bidirectional nature of these relationships. This project aims to examine whether the relationship between health and financial situation is reciprocal and to determine whether the strength of the relationship is symmetrical in both directions. If asymmetry is observed, we will further investigate which direction of the relationship is stronger. This knowledge can inform the design of social assistance interventions—whether they should focus more on financial or health aspects—and contribute to a better understanding of how health shocks propagate to financial outcomes and vice versa.

Understanding the interplay between health and financial situation is also fundamental to understanding mechanisms related to saving behavior, debt accumulation, and asset management.

In the second part of the project, we plan a more in-depth analysis of the impact of health on financial situation, based on the hypothesis that this direction of the relationship is stronger than the reverse. Health deterioration in older age may influence the time preferences of household members. One of the commonly accepted assumptions in life-cycle models—that time preferences remain stable over time—may require revision. We intend to investigate how time preferences evolve with age; for example, whether older individuals, facing higher mortality risk, are less inclined to defer consumption into the future.

Moreover, we seek to examine whether a major health event (e.g., heart attack, stroke, diabetes diagnosis, or cancer diagnosis) significantly shortens the planning horizon and increases the subjective probability of death. We will also assess whether and to what extent health shocks affect risk tolerance in financial decision-making.

Upowszechnianie wyników projektu

Zapraszamy do zapoznania się z raportem z badań: ZDROWIE A FINANSE - FINANSE A ZDROWIE