title: Mitigating the consequences of a health condition: The role of intra- and interhousehold assistance.
abstract: The behavior of noncoresident family members motivates much of the literature on consumption smoothing, risk-sharing, and informal networks, yet little is known empirically on the topic due to a lack of data simultaneously observing multiple households in an extended family. This study utilizes genealogically linked longitudinal data to examine how extended family networks insure against financial risks from severely limiting health conditions. We find that nonhealth consumption of unmarried households declines in response to worsening health, whereas married households smooth expenditures in a way that is consistent with full insurance. Families mitigate losses by reallocating home production, drawing down home equity, holding formal health insurance, collecting social security, and receiving transfers from noncoresident relatives. We illustrate that the costs of health shocks are transmitted throughout family networks, and that noncoresident children draw down their assets and consumption when responding to a parent's health decline.
authors.affiliation: Bureau of Labor Statistics, United States.
authors.forename: Michael
authors.initials: M
authors.lastname: Dalton
authors.affiliation: Department of Economics, Colby College, Waterville, ME, USA.
authors.forename: Daniel
authors.initials: D
authors.lastname: LaFave
mesh_terms: D000328:Adult; D017281:Cost of Illness; D016638:Critical Illness / Q000191:economics*; D005190:Family; D005260:Female; D005378:Financial Support; D005382:Financing, Personal / Q000191:economics* / Q000706:statistics & numerical data; D005102:Health Expenditures / Q000706:statistics & numerical data*; D006801:Humans; D007182:Income / Q000706:statistics & numerical data; D019458:Insurance Coverage / Q000191:economics* / Q000706:statistics & numerical data; D007348:Insurance, Health / Q000145:classification / Q000191:economics* / Q000706:statistics & numerical data; D008137:Longitudinal Studies; D008297:Male; D008875:Middle Aged; D012044:Regression Analysis; D014478:Unemployment
keywords: Consumption smoothing; Extended family; Health shocks; Informal insurance