Monthly Finance Message:

Health and Wealth Research Findings

May 2011

Barbara O'Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

For the past five years, the Rutgers Cooperative Extension Small Steps to Health and Wealth™ (SSHW) program has encouraged participants to take action to simultaneously improve their health and personal finances. In addition, SSHW provides information and conducts research about associations between individuals' health status and financial well-being. Below are some recent research findings that indicate how both aspects of a person's life- their health and personal finances- are strongly related:

  • Two-thirds of Americans are either overweight or obese. A per-person financial cost of obesity can be calculated that includes items such as sick days, reduced productivity, and extra costs for clothing, disability and life insurance, and even gasoline. A 2010 report pegged the annual cost of being obese at $4,879 for women and $2,646 for men. The difference between genders of the impact of obesity was largely due to differences in wages between obese and non-obese women.
  • Overweight and obesity have been shown to be associated with lower earnings in a number of studies, particularly for women in professional occupations. One study found that a 1% increase in a woman's body mass index (BMI) results in a 0.6% decrease in her family income. In this study and others, men experienced no negative effects of BMI on economic outcomes. In other words, wages didn't differ for obese men versus slender ones. Specific impacts related to weight include lost job opportunities and promotions, increased absenteeism, reduced productivity, and workplace stigmatization and harassment.
  • Workplace wellness and disease prevention programs produce positive results. One review of literature found that medical costs could fall by more than $3 and absenteeism costs more than $2 for every dollar spent on employee wellness programs. Improved employee retention was another reported positive outcome. Conversely, some studies have also concluded that paying cash incentives to encourage people to adopt healthy habits often fails in the long run. What seems to work best to encourage workers to improve their health habits are programs that help employees foster a sense of control over life events and develop supportive relationships to encourage positive health changes.
  • A sick economy can make people healthier. A North Carolina economist found that, during tough economic times, such as the 2007 to 2009 "Great Recession," the healthy living habits of Americans actually improve. Similar results have been found in studies conducted overseas. In the U.S. study, a 1% rise in the unemployment rate reduced the death rate by 0.5%. The most important reason for this decline was that people improved their health habits because they had additional free time to exercise and sleep. Fewer auto accidents due to reduced driving time were not a major contributing factor. Conversely, a 2004 study found a 3% increase in obesity rates for every 30 minutes of time spent commuting to work.
  • Increased health care costs often result in negative financial outcomes. According to the 2010 Health Confidence Survey, as a reaction to increased health care costs, 31% of respondents decreased retirement (e.g., 401(k) plan) savings, 55% decreased other types of savings, and 24% increased credit card debt.
  • Contrary to what many people might think, healthy people, on average, face higher health costs over their lifetime than those with poor health habits. This is why financial planners, whose clients often have above-average incomes and health care resources, generally run life expectancy calculations to age 95 or 100. There are three main reasons for this seemingly counterintuitive finding that healthy people spend more money on health care: 1. they live longer and will incur expenses over more years (e.g., age 93 versus 73), 2. they are likely to eventually succumb to a chronic disease (e.g., diabetes) at an advanced age, and 3. they have a higher lifetime risk of needing expensive long-term care.


  1. Rutgers
  2. Executive Dean of Agriculture and Natural Resources
  3. School of Environmental and Biological Sciences