Causal Effects of Health Shocks on Consumption and Debt: Quasi-Experimental Evidence from Bus Accident Injuries
AbstractEndogeneity in the health-wealth relationship presents a challenge for estimating causal effects of health shocks. Using a quasi-experimental study design, comprising exogenous shocks sustained as bus accident injuries in India, with, "controls," drawn from travelers on the same bus routes one year later, I present new evidence of causal effects of health shocks on household consumption and debt. Using primary household survey data, I find that households faced with the health shock-related expenditures, which were on average equal to two months of household income, are able to smooth consumption on food, housing, and festivals, with small reductions in education spending. Debt was the principal mechanism used by households to mitigate effects of the shock, leading to significantly larger levels of indebtedness among the exposed.
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Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 11-15.
Date of creation: 2011
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Health Shocks; Causal Effects; Quasi-experimental; Health Expenditure; Consumption Smoothing; Debt; Road Traffic Accidents;
Find related papers by JEL classification:
- I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General
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- Ambrosius, Christian, 2012. "Are remittances a substitute for credit? Carrying the financial burden of health shocks in national and transnational households," Discussion Papers 2012/9, Free University Berlin, School of Business & Economics.
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