"Healthy, wealthy, and wise?" revisited: An analysis of the causal pathways from socio-economic status to health

Much has been said about the stylized fact that the economically
successful are not only wealthier but also healthier than the less
affluent. There is little doubt about the existence of this
socio-economic gradient in health, but there remains a vivid debate
about its source. In this paper, we review the methodological
challenges involved in testing the causal relationships between
socio-economic status and health. We describe the approach of
testing for the absence of causal channels developed by Adams et
al. (2003) that seeks identification without the need to isolate
exogenous variation in economic variables, and we repeat their
analysis using the full range of data that have become available in
the Health and Retirement Study since, both in terms of
observations years and age ranges covered. This analysis shows that
causal inference critically depends on which time periods are used
for estimation. Using the information of longer panels has the
greatest effect on results. We find that SES causality cannot be
ruled out for a larger number of health conditions than in the
original study. An approach based on a reduced-form interpretation
of causality thus is not very informative, at least as long as the
confounding influence of hidden common factors is not fully
controlled.