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Mortality and survivor's consumption

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  • Michael Grimm

    ()
    (University of Göttingen, Department of Economics, DIW and DIAL)

Abstract

The empirical evidence shows that in developing countries illness shocks can have a severe impact on household income. Few studies have so fare examined the effects of mortality. The major difference between illness and mortality shocks is that a death of a household member does not only induce direct costs such as medical and funeral costs and possibly a loss in income, but that also the number of consumption units in the household is reduced. Using data for Indonesia, I show that the economic costs related to the death of children and older persons seem to be fully compensated by the decrease of consumption units. In contrast, when prime-age adults die, survivors face additional costs and, in consequence, implement coping strategies. It is shown that these are quite efficient and it seems that in terms of consumption households even over-compensate their loss, although they may face a higher vulnerability in the longer term. The results suggest that the implementation of general formal safety nets can give priority to the insurance of other types of risks, such as unemployment, illness or natural disasters. _________________________________ Des études empiriques montrent que dans les pays en voie de développement des chocs sanitaires peuvent avoir des effets sévères sur le revenu des ménages. Peu d’analyses ont jusqu’à présent analysé l’impact de la mortalité. La différence majeure entre une période de maladie et la mortalité est qu’un décès d’un membre du ménage n’implique pas seulement des coûts directs comme des coûts funéraires et peut-être une perte de revenu, mais que le nombre des unités de consommation dans le ménage est également réduit. Utilisant des données de l’Indonésie, je montre que les coûts économiques reliés à un décès d’un enfant et d’une personne âgée semblent entièrement compensés par la réduction des unités de consommation. A l´inverse, si des adultes en âge d’activité décèdent, les survivants font face à des coûts supplémentaires et, en conséquence, instaurent des stratégies pour surmonter les difficultés engendrées par ces décès. Il est montré que ces stratégies sont très efficaces et il semble qu’en termes de consommation les ménages surcompensent eux-mêmes leur perte, il est cependant possible qu’ils fassent alors face à une plus forte vulnérabilité dans le long terme. Les résultats suggèrent que l’instauration des filets de sécurité peut donner priorité à l’assurance d’autres types de risques, comme le chômage, la maladie ou des catastrophes naturelles.

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File URL: http://www.dial.ird.fr/media/ird-sites-d-unites-de-recherche/dial/documents/publications/doc_travail/2006/2006-13
File Function: First version, 2006
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Bibliographic Info

Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2006/13.

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Length: 32 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:dia:wpaper:dt200613

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Keywords: Mortality; consumption smoothing; risk; micro-model of consumption growth; Indonesia; Mortalité; lissage de consommation; risque; modèle micro-économique de la croissance de consommation; Indonésie.;

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References

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Citations

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Cited by:
  1. Kim Jungho & Alexia Prskawetz, 2009. "External Shocks, Household Consumption and Fertility in Indonesia," Working Papers 0604, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
  2. Thiele, Rainer & Omar Mahmoud, Toman, 2010. "Does AIDS-Related Mortality Reduce Per-Capita Household Income? Evidence from Rural Zambia," Open Access Publications from Kiel Institute for the World Economy 37508, Kiel Institute for the World Economy (IfW).
  3. Kathleen Beegle & Joachim De Weerdt & Stefan Dercon, 2007. "Adult Mortality and Consumption Growth in the Age of HIV/AIDS," CSAE Working Paper Series 2007-02, Centre for the Study of African Economies, University of Oxford.
  4. Günther, Isabel & Harttgen, Kenneth, 2009. "Estimating Households Vulnerability to Idiosyncratic and Covariate Shocks: A Novel Method Applied in Madagascar," World Development, Elsevier, vol. 37(7), pages 1222-1234, July.

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