Evaluating the Impact of Social Security Benefits on Health Outcomes Among the Elderly

Given concerns about the depletion of the Social Security Trust Fund, policymakers are considering several proposals to improve the financial sustainability of the program, including some that would lower benefits over time. The extent to which reductions in Social Security benefits impact individual health and well-being is not well understood. Using data from a nationally representative survey of older adults, we examine the impact of changes in Social Security income on a broad range of elderly health outcomes, including cognitive function, depression, disability and self-rated health. Prior literature has documented a positive association between income and health. However, this association may reflect unmeasured confounders that are correlated with both income and health (e.g. childhood environment) or may reflect the impact of health on income. To address these concerns and to identify the causal impact of income on health, we employ an instrumental variables strategy based on changes in Social Security income due to amendments to the Social Security Act in the 1970s. We discuss the implications of our findings for aging populations and for public policy.