Heterogeneous ‘adaptation’ and ‘income effects’ across self-reported health distribution?

Self-reported health is a key quality-of-life measure affected by well-known cognitive biases, such as adaptation (or anchoring to past health conditions) along with a socio-economic vector. There are good reasons to think that both effects heterogeneously impact the health distribution. This paper carries on empirical exercise to test whether the effects of adaptation and income are indeed, affected by individual heterogeneity. We use a continuous scale of health (the Visual Analogue Scale or VAS) and ex-post evaluations of the individual health status to capture adaptation using quantile regression. Our findings suggest that adaptation effects exhibit an inverse U-shaped form, more common in the median of the health distribution. Income effects exhibit a marked and non-linear impact at low quantiles. This is consistent with the hypothesis that income investments for relatively healthy people translate into very moderate effects on health. Health changes evaluated by the median individual are relatively more affected by adaptation.