In this paper we examine disparities in the ability to function among older Americans. We place special emphasis on two goals: (I) understanding the quantitatively large socioeconomic status-health gradient, and (2) the persistence in health outcomes over long periods. We find that there exist strong contemporaneous and long-run feedbacks from health to economic status. In light of these feedbacks, it is important to distinguish among alternative sources of income and the recipient of income in the household. This research also demonstrates that health outcomes at old age are influenced by health attributes of past, concurrent, and future generations of relatives. Finally, we find that the demographic and economic differences that exist among them explain functional health disparities by race and ethnicity, but not by gender.

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