The role of decision making processes in the correlation between wealth and health

There are many pathways explaining the relationship betweensocioeconomic status and health; one possibility is that somenormally unobservable characteristic causes people to invest bothin their financial well-being and their health. Here we consider thepossibility that the decision making processes are similar acrossdomains and that the steps individuals take to make decisions canhelp to explain the correlation in outcomes across domains. Wefocus particularly on retirement savings decisions and decisions inthe health domain. Choices in both domains have long-termconsequences and therefore require foresight and the ability toprocess complex information. Our results suggest that up to 44%of the correlation between wealth and health is due to the processesthat people use to make these choices.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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