In this paper, we hypothesize that education is associated with a higher efficiency of health investment, yet that this efficiency advantage is solely driven by intelligence. We operationalize efficiency of health investment as the probability of dying conditional on a certain hospital diagnosis and estimate a multistate structural equation model with three states: (i) healthy, (ii) hospitalized, and (iii) death. We use data from a Dutch cohort born around 1940 that links intelligence tests at age 12 years to later-life hospitalization and mortality records. The results indicate that intelligent individuals have a clear survival advantage for most hospital diagnoses, while the remaining disparities across education groups are small and not statistically significant.

Education, Health, Intelligence, Multistate duration model
dx.doi.org/10.1002/hec.3356, hdl.handle.net/1765/90028
Health Economics
Erasmus School of Economics

Bijwaard, G.E, & van Kippersluis, J.L.W. (2016). Efficiency of Health Investment: Education or Intelligence?. In Health Economics (Vol. 25, pp. 1056–1072). doi:10.1002/hec.3356