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Smoothing Consumption In Times Of Illness: Household Recourse Mechanisms.

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Smoothing Consumption In Times Of Illness: Household Recourse Mechanisms.

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Smoothing consumption in times of illness: Household recourse mechanisms.

Abhishek Dureja¹, Digvijay S Negi¹

¹Indira Gandhi Institute of Development Research, Mumbai, India.

Health Economics

|March 19, 2024

View abstract on PubMed

Summary

This summary is machine-generated.

Illness shocks in rural India increase medical costs and reduce income but do not affect overall consumption. Households use informal loans and kinship networks to cope with these health challenges.

Keywords:

India consumption smoothing coping‐mechanisms illness shocks

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Area of Science:

Agricultural Economics
Development Economics
Health Economics

Background:

Rural Indian households face significant challenges due to limited access to credit, insurance, and public healthcare.
Rainfed agriculture in semi-arid and humid eastern India makes households vulnerable to economic shocks.
Illness shocks represent a critical threat to the welfare of these agricultural households.

Purpose of the Study:

To investigate the welfare consequences of illness shocks on rural agricultural households in India.
To analyze the impact of illness on household expenditures, income, and consumption patterns.
To examine the role of age and gender in the economic burden of illness.

Main Methods:

The study analyzes the welfare impacts of illness shocks on rural agricultural households.

It examines changes in medical expenditures, wage income, and consumption patterns.

The research disaggregates illness impacts by age and gender of household members.

Main Results:

Illness shocks significantly increase medical expenditures and reduce wage income for rural households.
Aggregate consumption, including food and non-food items, remains largely insensitive to illness shocks.
Illness in male children and prime-aged adults has the most substantial impact on medical spending and earnings, respectively.
Households experience changes in dietary diversity, increased travel costs, and reduced spending on education and entertainment.

Conclusions:

Rural Indian households employ risk-coping strategies such as kinship transfers and informal loans to manage illness shocks.
Consumption smoothing is achieved through reliance on social networks and informal credit markets, particularly for landless and smallholder farmers.
Understanding these impacts is crucial for designing effective social protection programs for vulnerable agricultural populations.