Implications of Social and Material Deprivation for Changes in Health of Older People.

We use the panel structure of the Survey of Health, Ageing and Retirement in Europe (SHARE) data for 14 countries to examine the implications of material and social deprivation for health deterioration in old age and mortality. To minimize the potential endogeneity bias, we examine the relationship between deprivation and changes in health rather than levels of health. We include a substantial set of fixed "initial conditions," and extend the controls with health measures, as observed at the initial period. The results of the probit regression suggest a strong and statistically significant relationship between measures of material and social deprivation and changes in physical and mental health. Mortality is only affected by the social dimension of deprivation. Treating material and social deprivation separately rather than as a single social exclusion indicator allows for more specific identification of the role of the two dimensions, which might be important for policy decisions.