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Breaking Bad: How Health Shocks Prompt Crime

Author

Listed:
  • Steffen Andersen
  • Elin Colmsjö
  • Gianpaolo Parise
  • Kim Peijnenburg

Abstract

Exploiting plausibly exogenous variations in the timing of cancer diagnoses, we establish that health shocks elicit a large and persistent increase in the probability of committing a crime. This effect materializes in a substantial rise in both first crimes and re-offenses. We uncover evidence for two mechanisms. First, an economic motive leads individuals to compensate the loss of legal revenues with illegal earnings. Second, cancer patients face lower expected cost of punishment through a lower survival probability. Welfare programs that alleviate the economic repercussions of health shocks are effective at mitigating the ensuing negative externality on society.

Suggested Citation

  • Steffen Andersen & Elin Colmsjö & Gianpaolo Parise & Kim Peijnenburg, 2026. "Breaking Bad: How Health Shocks Prompt Crime," American Economic Journal: Applied Economics, American Economic Association, vol. 18(1), pages 88-119, January.
    • Handle: RePEc:aea:aejapp:v:18:y:2026:i:1:p:88-119
    DOI: 10.1257/app.20220769
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    References listed on IDEAS

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    1. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
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    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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