Increasing welfare and longevity and the corresponding rise in the demand for health services are confronting society with ever-rising healthcare costs. Projections of these expenses for 2060 are as high as 10.3% of U.S. GDP and 9.7 % of the E.U. GDP (Maisonneuve and Martins, 2013). Understanding the causes of health deprivation, and providing solutions towards preventing it presents an increasingly critical challenge for academia, private market participants, and policymakers. This study is the rst to explore the direct impact of indoor housing conditions on the health status of private individuals and their demand for health care, using a unique sample of thousands of German households.

1. Erdal Aydin, Piet Eichholtz, Nils Kok and Juan Palacios
School of Business and Economics, Maastricht University, The Netherlands.
On the Economics of Health in Homes

2. Environmental conditions and health
¡ Environmental studies show:
¡ Outside air pollution affecting morbidity, school absences.
¡ Higher mortality rates at (extremely) high and low outside temperatures
¡ Causal effects on child mortality from moving into less distressed
neighborhood environments
However…
¡ We spend 90% of our time indoors…
...so buildings are likely to affect us
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3. The Effect of Bad Housing Conditions
Effect on health status and demand for health care has not been established
What is the effect of indoor environment on occupants’ health status and the
demand for health care?
Lack of evidence linking housing and health
Positive correlations (e.g. LARES) between housing and health …
… but lack of clear control groups
Evidence from slums and/or developing countries
No generalizable results to OECD population
“Piso firme” program: Putting cement on floor reduces the mortality rates in the area
Field experiment in India: Replacing cooking stoves improves health of occupants
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4. Our Data: German Socio Economic Panel
Monitoring German households for over 30 years
Household personal survey, representative of German population
Analysis based on waves 1991-2013 in west Germany
336,886 observations
56,454 individuals followed up to 20 years
Every year: Inidividuals are asked to evaluate:
Health: Mental and Physical health (SF12 questionnaire) and number of visits to
the doctor
Evaluate the conditions of their house:
1. House in good conditions: 47,562 households
2. House in need for partial renovations 28,733 households
3. House in need for full renovations 4,836 households
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5. 4
Impact of Dwelling Conditions on Health
First look at data suggests remarkably strong relationship
Reporting bad health status

6. Impact of Dwelling Conditions on Health
First look at data suggests remarkably strong relationship
5
Number of visits to the doctor in the last 3 months

7. Impact of Dwelling Conditions on Health
First look at data suggests remarkably strong relationship
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Number of visits to the doctor in the last 3 months by income group

8. Impact of Dwelling Conditions on Health
First look at data suggests remarkably strong relationship
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Number of visits to the doctor in the last 3 months by age group

9. Impact of Dwelling Conditions on Health
First look at data suggests remarkably strong relationship
Owners Tenants

10. Estimating the Effect of Housing
Isolating the effect of housing conditions from socio-economic and environmental factors
• Controlling socio-economic characteristics:
• Education
• Income
• Labor status
• Household composition
• Analysis based on within individual variation (individual fixed effects)
• Movers are excluded from the simple
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11. 10
Estimation Results
Effect of house conditions on health status
Individuals under bad
housing conditions:
3.6% more likely to report
bad/poor health status
Perform 4.6% worse in
mental health scale than
average respondent
(1) (2) (3)
Bad health (1=yes)
Mental
Scale
Physical
scale
House conditions
In need for partial
renovation 0.0103** -0.557*** -0.540***
[0.004] [0.205] [0.167]
In need for major
renovation 0.0360*** -2.368*** -0.966*
[0.012] [0.808] [0.571]
Observations 124,768 34,813 34,813
R-squared 0.158 0.012 0.037
Number of individuals 31,971 14,874 14,874
Mean dependent variable 0.279 51.389 48.643
Socio-demographic YES YES YES
Individual FE YES YES YES
Year FE YES YES YES
Excluding movers YES YES YES
Robust standard errors in brackets clusterred at the household level. *** p<0.01, ** p<0.05, * p<0.1

12. 11
Estimation Results
Effect of house conditions on demand for health care
Individuals under bad
housing conditions:
3.6% more likely to report
bad or poor health status
4.6% worse in mental scale
12.51% higher number of
doctor visits than average
individuals
(4) (5)
Visit doctor
(1=yes)
Number doctor
visits
House conditions
In need for partial renovation 0.005 0.121***
[0.00439] [0.044]
In need for major renovation 0.011 0.474***
[0.0135] [0.141]
Observations 124,768 81,404
R-squared 0.037 0.004
Number of individuals 14,874 23,813
Mean dependent variable 48.643 3.788
Socio-demographic YES YES
Individual FE YES YES
Year FE YES YES
Excluding movers YES YES
Robust standard errors in brackets clusterred at the household level. *** p<0.01, ** p<0.05, * p<0.1

13. 12
Subsample Analysis
Which groups are more affected by poor housing conditions?
The strongest link:
Older (above 64):
28% more doctor visits
than average individual
Women:
23% more doctor visits
than average individual
(1) (2)
All sample
Oldest
People
House conditions
In need for partial renovation 0.121*** 0.251**
[0.044] [0.114]
In need for major renovation 0.474*** 1.255***
[0.141] [0.442]
Observations 81,404 30,004
R-squared 0.004 0.005
Number of individuals 23,813 6,743
Mean dependent variable 3.79 4.45
Socio-demographic YES YES
Individual FE YES YES
Year FE YES YES
Excluding movers YES YES
Robust standard errors in brackets clusterred at the household level. *** p<0.01, ** p<0.05, * p<0.1

14. Conclusions
Poor housing conditions negatively affect reported health
Leads to an increase in the number of doctor visits
The effect is stronger among elder people.
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15. Questions?
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Erdal Aydin
e.aydin@maatrichtuniversity.nl