Wealth is Health: Pensions and Disease Onset in the Gilded Age

Shari Eli, University of California, Berkeley

How did individual income increases affect adult health a century ago? Disentangling the effect of income as opposed to medical advancements or public health interventions, I use exogenous variation in income from the first widescale U.S. entitlement program – Union Army pensions. Documenting that Republican Congressional candidates boosted veterans’ pensions to secure votes, I exploit exogenous increases in income stemming from Republican corruption to estimate effects on morbidity and mortality. I find that an extra $1 of monthly pension income lowered the probability of infectious disease onset by 38% and lowered the crude death rate by .008. I find effects for infectious, respiratory and digestive illnesses, but none for most endocrine diseases. Results shape our understanding of the U.S. mortality transition and inform today’s debates on the health benefits of cash transfers in regions with wide SES gradients in health, as was the case in the U.S. a century ago.