[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ajt/wcinch/82497.html
   My bibliography  Save this paper

Severe Health Shocks and Financial Well-Being

Author

Listed:
  • Majlesi, Kaveh
  • Molin, Elin
  • Roth, Paula
Abstract
We examine the effect of fatal and nonfatal health shocks on household debt defaults. Fatal shocks significantly cause defaults, especially among surviving spouses lacking sufficient resources, namely housing wealth. Our findings suggest that this behavior is not due to inattention. These shocks also have intergenerational consequences, as children of resource-poor surviving spouses become more likely to face debt collection. These findings in a country with a relatively generous welfare system manifest the graveness of background risks among poorer households and suggest the potential for improving social insurance programs. Nonfatal health shocks lead to an immediate but temporary increase in default likelihood.

Suggested Citation

  • Majlesi, Kaveh & Molin, Elin & Roth, Paula, 2024. "Severe Health Shocks and Financial Well-Being," CINCH Working Paper Series (since 2020) 82497, Duisburg-Essen University Library, DuEPublico.
    • Handle: RePEc:ajt:wcinch:82497
    DOI: 10.17185/duepublico/82497
    as

    Download full text from publisher

    File URL: https://duepublico2.uni-due.de/servlets/MCRFileNodeServlet/duepublico_derivate_00082041/CINCH_Series_2024_02.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.17185/duepublico/82497?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jeppe Druedahl & Alessandro Martinello, 2022. "Long-Run Saving Dynamics: Evidence from Unexpected Inheritances," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 1079-1095, December.
    2. Will Dobbie & Jae Song, 2015. "Debt Relief and Debtor Outcomes: Measuring the Effects of Consumer Bankruptcy Protection," American Economic Review, American Economic Association, vol. 105(3), pages 1272-1311, March.
    3. Jeon, Sung-Hee & Pohl, R. Vincent, 2017. "Health and work in the family: Evidence from spouses’ cancer diagnoses," Journal of Health Economics, Elsevier, vol. 52(C), pages 1-18.
    4. Itzik Fadlon & Torben Heien Nielsen, 2019. "Family Health Behaviors," American Economic Review, American Economic Association, vol. 109(9), pages 3162-3191, September.
    5. Gianpaolo Parise & Kim Peijnenburg, 2019. "Noncognitive Abilities and Financial Distress: Evidence from a Representative Household Panel," The Review of Financial Studies, Society for Financial Studies, vol. 32(10), pages 3884-3919.
    6. Callaway, Brantly & Sant’Anna, Pedro H.C., 2021. "Difference-in-Differences with multiple time periods," Journal of Econometrics, Elsevier, vol. 225(2), pages 200-230.
    7. Eran Shor & David Roelfs & Misty Curreli & Lynn Clemow & Matthew Burg & Joseph Schwartz, 2012. "Widowhood and Mortality: A Meta-Analysis and Meta-Regression," Demography, Springer;Population Association of America (PAA), vol. 49(2), pages 575-606, May.
    8. Itzik Fadlon & Torben Heien Nielsen, 2021. "Family Labor Supply Responses to Severe Health Shocks: Evidence from Danish Administrative Records," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 1-30, July.
    9. Poterba, James M. & Venti, Steven F. & Wise, David A., 2017. "The asset cost of poor health," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 172-184.
    10. Nam, Tong-yob & Oh, Seungjoon, 2021. "Non-recourse mortgage law and housing speculation," Journal of Banking & Finance, Elsevier, vol. 133(C).
    11. Annamaria Lusardi & Pierre-Carl Michaud & Olivia S. Mitchell, 2017. "Optimal Financial Knowledge and Wealth Inequality," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 431-477.
    12. Carlos Dobkin & Amy Finkelstein & Raymond Kluender & Matthew J. Notowidigdo, 2018. "The Economic Consequences of Hospital Admissions," American Economic Review, American Economic Association, vol. 108(2), pages 308-352, February.
    13. Meyll, Tobias & Pauls, Thomas, 2019. "The gender gap in over-indebtedness," Finance Research Letters, Elsevier, vol. 31(C).
    14. Marieke Bos & Emily Breza & Andres Liberman, 2018. "The Labor Market Effects of Credit Market Information," The Review of Financial Studies, Society for Financial Studies, vol. 31(6), pages 2005-2037.
    15. Cochrane, John H, 1991. "A Simple Test of Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 957-976, October.
    16. Joseph J. Doyle, 2011. "Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 221-243, July.
    17. Benjamin J & Neale Mahoney & Hanbin Yang & Tarun Ramadorai, 2023. "What Determines Consumer Financial Distress? Place- and Person-Based Factors," The Review of Financial Studies, Society for Financial Studies, vol. 36(1), pages 42-69.
    18. Sumit Agarwal & Vyacheslav Mikhed & Barry Scholnick, 2020. "Peers’ Income and Financial Distress: Evidence from Lottery Winners and Neighboring Bankruptcies," The Review of Financial Studies, Society for Financial Studies, vol. 33(1), pages 433-472.
    19. Petter Lundborg & Martin Nilsson & Johan Vikström, 2015. "Heterogeneity in the impact of health shocks on labour outcomes: evidence from Swedish workers," Oxford Economic Papers, Oxford University Press, vol. 67(3), pages 715-739.
    20. Ankit Kalda & Lauren Cohen, 2020. "Peer Financial Distress and Individual Leverage," The Review of Financial Studies, Society for Financial Studies, vol. 33(7), pages 3348-3390.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Volha Lazuka, 2022. "Household and individual economic responses to different health shocks: The role of medical innovations," Papers 2206.03306, arXiv.org, revised Nov 2022.
    2. Henri Salokangas, 2021. "Exploring the labor market consequences of psychiatric disorders: An event study approach," Discussion Papers 148, Aboa Centre for Economics.
    3. Crego, Julio & Kárpáti, Daniel & Kværner, Jens & Renneboog, Luc, 2022. "The Economic Value of Eliminating Diseases," Other publications TiSEM 8b51764f-3ccd-4bb8-9da1-4, Tilburg University, School of Economics and Management.
    4. Bonekamp, Johan & Wouterse, Bram, 2023. "Do different shocks in health matter for wealth?," Journal of Health Economics, Elsevier, vol. 87(C).
    5. Aouad, Marion, 2023. "The intracorrelation of family health insurance and job lock," Journal of Health Economics, Elsevier, vol. 90(C).
    6. Riekhoff, Aart-Jan & Vaalavuo, Maria, 2021. "Health shocks and couples’ labor market participation: A turning point or stuck in the trajectory?," Social Science & Medicine, Elsevier, vol. 276(C).
    7. Jeon, Sung-Hee & Pohl, R. Vincent, 2019. "Medical innovation, education, and labor market outcomes of cancer patients," Journal of Health Economics, Elsevier, vol. 68(C).
    8. Svetlana Pashchenko & Ponpoje (Poe) Porapakkarm & Mariacristina De Nardi, 2017. "The Lifetime Costs of Bad Health," 2017 Meeting Papers 533, Society for Economic Dynamics.
    9. Aouad, Marion, 2021. "An Examination of the Intracorrelation of Family Health Insurance," IZA Discussion Papers 14541, Institute of Labor Economics (IZA).
    10. O'Donnell, Owen, 2024. "Health and health system effects on poverty: A narrative review of global evidence," Health Policy, Elsevier, vol. 142(C).
    11. Wen, Jiayi & Huang, Haili, 2024. "Parental health penalty on adult children’s employment: Gender differences and long-term consequences," Journal of Health Economics, Elsevier, vol. 95(C).
    12. Nicholas A. Jolly & Nikolaos Theodoropoulos, 2023. "Health shocks and spousal labor supply: an international perspective," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(2), pages 973-1004, April.
    13. Pattison, Nathaniel, 2020. "Consumption smoothing and debtor protections," Journal of Public Economics, Elsevier, vol. 192(C).
    14. Wolfgang Frimmel & Martin Halla & Jörg Paetzold & Julia Schmieder, 2020. "Health of Elderly Parents, Their Children's Labor Supply, and the Role of Migrant Care Workers," Discussion Papers of DIW Berlin 1902, DIW Berlin, German Institute for Economic Research.
    15. Annarita Macchioni Giaquinto & Andrew M. Jones & Nigel Rice & Francesca Zantomio, 2022. "Labor supply and informal care responses to health shocks within couples: Evidence from the UK," Health Economics, John Wiley & Sons, Ltd., vol. 31(12), pages 2700-2720, December.
    16. Emily Nix & Martin Eckhoff Andresen, 2019. "What Causes the Child Penalty? Evidence from Same Sex Couples and Policy Reforms," Discussion Papers 902, Statistics Norway, Research Department.
    17. Felix Glaser & Gerald J. Pruckner, 2023. "A hard pill to swallow? Parental health shocks and children's mental health," Health Economics, John Wiley & Sons, Ltd., vol. 32(12), pages 2768-2800, December.
    18. Simonetti, Irene & Belloni, Michele & Farina, Elena & Zantomio, Francesca, 2022. "Labour market institutions and long term adjustments to health shocks: Evidence from Italian administrative records," Labour Economics, Elsevier, vol. 79(C).
    19. Fontenay, Sébastien & Tojerow, Ilan, 2020. "Work Disability after Motherhood and How Paternity Leave Can Help," IZA Discussion Papers 13756, Institute of Labor Economics (IZA).
    20. Wolfgang Frimmel & Martin Halla & Joerg Paetzold & Julia Schmieder, 2020. "Health of Elderly Parents, their Children's Labor Supply, and the Role of Migrant Care Workers," Economics working papers 2020-18, Department of Economics, Johannes Kepler University Linz, Austria.

    More about this item

    Keywords

    financial distress; health shocks; household debt; household saving; JEL classification: I12; G51; G22;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ajt:wcinch:82497. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: DuEPublico (email available below). General contact details of provider: https://edirc.repec.org/data/cinchde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.