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Credit Access and Mobility during the Flint Water Crisis

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Abstract

How do credit-constrained communities cope with the financial consequences of environmental crises? Beginning in April 2014, the residents of Flint, Michigan, were exposed to lead-contaminated water resulting from a series of governmental missteps. In this paper, we use the spatial distribution of lead and galvanized pipes in Flint to study the effect of the crisis on households’ financial health, including loan balances, repayment of outstanding debt, and Equifax Risk Scores, as well as on household mobility. We find that relatively more affected households, as measured by exposure to lead pipes, experienced a modest increase in the balance and frequency of past due loans. Equifax Risk Scores declined slightly on average, but more so at the bottom of the Risk Score distribution. In addition, we find that there was no effect on mobility out of the state or county, but that more affected households were more likely to move within the city when the crisis began, away from lead-pipe-dense areas.

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  • Nicole Gorton & Maxim L. Pinkovskiy, 2021. "Credit Access and Mobility during the Flint Water Crisis," Staff Reports 960, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:89914
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    1. Shooshan Danagoulian & Daniel Grossman & David Slusky, 2022. "Health Care Following Environmental Disasters: Evidence from Flint," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(4), pages 1060-1089, September.

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    More about this item

    Keywords

    consumer finance; mobility; natural disasters;
    All these keywords.

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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