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Mortality and survivors' consumption

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  • Grimm, Michael

Abstract

The literature suggests that in developing countries illness shocks at the household level can have a negative and 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. Studies so far focused mainly on adult mortality, disregarded the death of other household members and distinguished only insufficiently between the immediate impact, and the impact after coping strategies have been implemented. 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 the household. In contrast, when prime-age adults die, survivors face additional costs due to the loss of income and, in consequence, implement coping strategies. These strategies are quite efficient and it seems that on average households even over-compensate their loss. This suggests that the implementation of general formal safety nets which are still absent in Indonesia?as in most developing countries?can give priority to the insurance of other types of risks, such as unemployment, illness or natural disasters. --

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Bibliographic Info

Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Berlin 2006 with number 9.

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Date of creation: 2006
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Handle: RePEc:zbw:gdec06:4732

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Keywords: Mortality; risk; insurance; micro-model of consumption growth; Indonesia;

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References

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Citations

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Cited by:
  1. Jungho Kim & Alexia Prskawetz, 2010. "External Shocks, Household Consumption and Fertility in Indonesia," Population Research and Policy Review, Springer, vol. 29(4), pages 503-526, August.
  2. Kathleen Beegle & Joachim De Weerdt & Stefan Dercon, 2008. "Adult Mortality and Consumption Growth in the Age of HIV/AIDS," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 299-326.
  3. Toman Omar Mahmoud & Rainer Thiele, 2009. "Does AIDS-Related Mortality Reduce Per-Capita Household Income? Evidence from Rural Zambia," Kiel Working Papers 1530, Kiel Institute for the World Economy.
  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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