Short-run and long-run persistence of bad health among elderly

We study the health dynamics among older Americans using ten waves of the Health and Retirement Study following a spell-approach and a regression-based approach. The former is fully non parametric synthesizing the sequences of health status into a Health Persistence Index. The latter approach relies on a Latent Markov (LM) model capturing persistence in poor health by modelling time-varying unobserved heterogeneity. Our results show that only few elders experiences persistently a poor health status. The higher values of the index are consistently observed with the main socio-demo-economic risk factors. Moreover LM model indicates the existence of three unobserved groups differing in their propensity to report poor health. The two approaches provide very similar insights on both persistence and unobserved pathways of ill/health status, although their fundamental differences.