# 15-004/V (2014-01-09)

Author(s)
Govert Bijwaard, University of Groningen, the Netherlands; Hans van Kippersluis, Erasmus University Rotterdam, the Netherlands
Keywords:
Education, Intelligence, Health, Multistate duration model
JEL codes:
C41, I14, I24

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) ill (in hospital), and (iii) death. We use data from a Dutch cohort born around 1940 that links intelligence tests at age 12 to later-life hospitalization and mortality records. The results suggest that higher Intelligence induces the higher educated to be more efficient users of health investment - intelligent individuals have a clear survival advantage for most hospital diagnoses - yet for unanticipated health shocks and diseases that require complex treatments such as COPD, education still plays a role.