Causal Effects of Health Shocks on Consumption and Debt: Quasi-Experimental Evidence from Bus Accident Injuries

Journal Article

Endogeneity between health and wealth presents a challenge for estimating causal effects of health shocks. Using a quasi-experimental design, comprising exogenous shocks sustained as bus accident injuries in India, with controls drawn from travelers on the same bus routes one year later, I present new evidence of causal effects on consumption and debt. Using primary household survey data, I find that households faced with shock-related expenditures are able to smooth consumption on food, housing, and festivals, with small reductions in educational spending. Debt was the principal mitigating mechanism households used, leading to significantly larger levels of indebtedness. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Duke Authors

Cited Authors

  • Mohanan, M

Published Date

  • May 2013

Published In

  • Review of Economics and Statistics

Volume / Issue

  • 95 / 2

Start / End Page

  • 673 - 681