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Mortality and Survivors' Consumption

Author

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  • Michael Grimm
Abstract
In developing countries illness shocks can have a severe impact on household income. Few studies have so fare examined the effects of mortality. The major difference between illness and mortality shocks is that a death of a household member does not only induce direct costs such as medical and funeral costs and possibly a loss in income, but that also the number of consumption units in the household is reduced. Using data for Indonesia, I show that the economic costs related to the death of children and older persons seem to be fully compensated by the decrease of consumption units. In contrast, when prime-age adults die, survivors face additional costs and, in consequence, implement coping strategies. It is shown that these are quite efficient and it seems that in terms of consumption households even overcompensate their loss, although they may face a higher vulnerability in the longer term. The results suggest that the implementation of general formal safety nets can give priority to the insurance of other types of risks, such as unemployment, illness or natural disasters.

Suggested Citation

  • Michael Grimm, 2006. "Mortality and Survivors' Consumption," Discussion Papers of DIW Berlin 611, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp611
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    References listed on IDEAS

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    Cited by:

    1. Kathleen Beegle & Joachim De Weerdt & Stefan Dercon, 2008. "Adult Mortality and Consumption Growth in the Age of HIV/AIDS," Economic Development and Cultural Change, University of Chicago Press, vol. 56(2), pages 299-326, January.
    2. Omar Mahmoud, Toman & Thiele, Rainer, 2009. "Does AIDS-related mortality reduce per-capita household income? Evidence from rural Zambia," Kiel Working Papers 1530, Kiel Institute for the World Economy (IfW Kiel).
    3. Günther, Isabel & Harttgen, Kenneth, 2009. "Estimating Households Vulnerability to Idiosyncratic and Covariate Shocks: A Novel Method Applied in Madagascar," World Development, Elsevier, vol. 37(7), pages 1222-1234, July.
    4. Jungho Kim & Alexia Prskawetz, 2010. "External Shocks, Household Consumption and Fertility in Indonesia," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 29(4), pages 503-526, August.
    5. Romano, Donato & Carraro, Alessandro, 2015. "Price Shocks, Vulnerability and Food and Nutrition Security among Rural and Urban Households in Tanzania," 2015 Fourth Congress, June 11-12, 2015, Ancona, Italy 207281, Italian Association of Agricultural and Applied Economics (AIEAA).

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    More about this item

    Keywords

    Mortality; consumption smoothing; risk; micro-model of consumption growth; Indonesia.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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