Title: Three essays on the effects of health shocks
Description: This dissertation examines the effects of health shocks on a variety of individual and household-level outcomes. Chapter 1 attempts to estimate the causal effects of health shocks on household economic outcomes using a quasi-experimental study design, comprising exogenous shocks sustained as bus accident injuries in India and matched unexposed drawn from travelers on the same bus routes. I find evidence of partial consumption smoothing with some negative effect on education, but no effect on food consumption. Debt was the principal mechanism used by households to mitigate effects of the shock, leading to significantly larger levels of indebtedness among the exposed. This evidence draws attention towards costly mechanisms adopted by households to smooth consumption. Chapter 2 relies on data collected as part of the same Karnataka study and seeks to understand causal relationships underlying comorbidity in physical and mental health. I find that exposure to this acute negative health event increases psychological distress by 1.5 standard deviations on the distress scale one year later. Physical Disability acts as a key mediating mechanism, accounting for 65% of the total observed effect. Indebtedness resulting from health shock did not mediate the observed association between the exposure and distress levels. Physical health events, especially acute conditions that are associated with increased disability levels, have large and significant causal effects on mental health over one year later.

In Chapter 3, I examine the consequences and predictors of onset of chronic conditions in the United States using data from 8 waves of the Health and Retirement Study (HRS). I find that onset of major chronic conditions increases out of pocket expenses by about $2500 in the subsequent wave. Over the 14 year period spanning the 8 waves, the cumulative financial losses associated with a major onset in the second wave is over $68,000. I also find evidence of large reductions in the probability of working following major onsets. Further, I also find that changes in stock wealth as well as baseline asset levels are negatively associated with probability of major onsets of illness, suggesting that baseline SES levels can influence future health outcomes.