Adverse economic shocks exert an influence on health perceptions, but little is known about the effect of sudden positive changes in a person's financial situation on self-rated health, particularly among low income people. This paper explores the association between an increase in the amount of non-contribution pensions, public cash transfers given to Costa Rican elderly of low socio-economic status (SES) and changes in self-rated health over time. The analysis is based on data from CRELES, the "Costa Rican Study on Longevity and Healthy Aging", which is based on a probabilistic sample of people born in 1945 or earlier, and living in Costa Rica by 2002. The fieldwork for the first and second waves of CRELES was conducted from 2004 to 2006, and from 2006 to 2008, respectively. The Costa Rican Government raised the amount of the non-contribution pension for the poor 100% before July 2007, and an additional 100% after that date. Due to the CRELES fieldwork schedule, the data have a natural quasi-experimental design, given that approximately half of CRELES respondents were interviewed before July 2007, independently of their status in receiving the public cash transfers. Using random effects ordered probit regression models, we find that people who experienced such increase report a greater improvement in self-rated health between waves than those who experienced a smaller increase and than the rest of the interviewees. Results suggest that increases in income may lead to a greater improvement in self-rated health.
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