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# II. **DATA, CONTEXT, AND METHODS**

# **Data and descriptive statistics**

The analysis is based on the China Health and Nutrition Survey (CHNS).<sup>4</sup> The CHNS is a longitudinal survey that covers nine out of China’s 33 province-level divisions.<sup>5</sup> Four counties, stratified by income, were randomly selected in each of the 9 provinces. In addition, the provincial capital and a lower income city were selected when feasible. Within the 36 counties and urban areas, 190 primary sampling units (villages and urban neighbourhoods) were selected randomly. The paper draws on data from four rounds of the CHNS: 1991, 1993, 1997, and 2000.<sup>6</sup> In each year, we focus on the heads of households. The total number of observations for each year is 2,368 (1991), 2,627 (1993), 2,985 (1997), and 2,667 (2000).<sup>7</sup> The four rounds of the CHNS panel cover a period of dramatic change in China. In this paper we focus on how changes in self-assessed health (SAH) relate to changes in economic outcomes. SAH—sometimes referred to as General Health Status—is based on self-evaluation of health status according to a scale of four or five, typically ranging from ‘poor’ to ‘excellent’. SAH is popular in the empirical literature because it has been shown to be highly correlated with subsequent morbidity and mortality.<sup>8</sup> In the parts of China covered by the CHNS, SAH has worsened gradually over the four rounds of survey (Table 1).<sup>9</sup> In 1991, 27% of heads of households rated their health as fair or poor; by 2000, this had increased to 37%. This worsening is also reflected in the principal health shocks variable used in the paper, SAH_CHANGE, which is simply the change in SAH between periods. Acknowledging the restrictions imposed by using a simple difference in SAH as a health shock measure, we also explore a more flexible form

> 4 Details taken from CHNS website http://www.cpc.unc.edu/projects/china.

> 5 Guangxi, Guizhou, Heilongjiang (1997 and 2000 only), Henan, Hubei, Hunan, Jiangsu, Liaoning (not 1997), and Shandong. 6 The first round of the CHNS was implemented in 1989. Data from this round are not used here because some of the variables of interest are not available in the first round, and because of the lack of comparability in other variables.

> 7 In the CHNS sampling procedure, all new households formed from sample households who resided in sample areas were added to the sample. In 1997, new communities were added to replace households or communities no longer participating. Moreover, Heilongjiang province replaced Liaoning province. In 2000, newly formed households and replacement households were also added, and Liaoning province returned to the study. Although attrition has been relatively low, the sample size used for the analysis is considerably lower than the total number of households in the sample: 3,616 (1991), 3,441 (1993), 3,875 (1997), and 4,403 (2002). This primarily reflects two factors. First, data were incomplete for some of the variables of interest, in particular self-assessed health. As a result, nearly 20% of observations were dropped. In addition, approximately 10% of the observations had to be dropped because data were only available for one year. A small number of observations were also dropped as outliers in the data.

> 8 The use of self-assessed health to study the impact of health shocks also has important limitations. These are discussed in more detail in the method section.

> 9 The question about self-reported status in the CHNS is asked relative to ‘other people in your age’. As a consequence, changes in SAH should not reflect secular, age-related, changes in health status.