Effects of government cash subsidies on health risk behaviors of the rural elderly: Evidence from social pension expansions in China

There is relatively little research on the impact of government cash subsidies on health risk behaviors of the elderly in China. We thus analyzed the effect of pension subsidies on the smoking and drinking behaviors of rural elderly using a pension scheme introduced in rural China in 2009. Based on panel data from the Chinese Longitudinal Healthy Longevity Survey (CLHLS) in 2008 and 2011, a Difference-in-Differences (DID) method was applied to comprehensively analyze the impact of the new agricultural insurance on the health risk behaviors of the rural elderly. In order to solve possible sample selection biases, the Propensity Score Matching with Difference-in-Differences (PSM-DID) approach was used. We found that the implementation of the government cash subsidies clearly promoted smoking rather than drinking behavior among rural older adults. Specifically, the government cash subsidies facilitated smokers to smoke an additional 2.9 cigarettes/day, and the impact of government cash subsidies on the average cigarettes/day among smokers was more pronounced among the male elderly, lower age elderly, higher income elderly, and elderly with intact instrumental activities of daily living (IADL). In order to reduce the negative externalities of old-age subsidies, the government should place some restrictions on the use of cash subsidies for tobacco purchase by the elderly.