Sharing Health Risk and Income Risk within Households: Evidence from Japanese Data

We examine the question of which household members should consume medical services, and in what quantities, by using Japanese household-level data. We employ two key concepts, health risk and income risk, and investigate whether family heads or dependents bear these risks. Health risk is the risk that a household member falls ill, while income risk is the risk that future household income decreases. We find that both heads and dependents make fewer visits to doctors as household size increases. We also find that only dependents visited doctors less frequently following the reform of the public health insurance system, which raised the co-payment rate of family heads from 10% to 20%. These findings imply that heads and dependents share health risk but dependents bear income risk