When loss strikes twice: severe health shocks and financial well-being

Kaveh Majlesi (), Elin Molin () and Paula Roth
Additional contact information
Kaveh Majlesi: Monash University, Lund University, IZA and CEPR
Elin Molin: Lund University, UCFS, CED and KWC

No 2026:11, Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy

Abstract: We study how fatal and nonfatal health shocks affect households’ ability to meet their financial obligations. We find that fatal shocks substantially increase the likelihood of default and that housing wealth plays a key role as a self-insurance mechanism. Surviving spouses who experience the largest income losses are more likely to sell their homes, and those without housing wealth face a sharply higher risk of debt collection. In the most financially vulnerable families, these shocks even generate intergenerational spillovers. In contrast, nonfatal health shocks lead to only modest increases in default risk. Taken together, our findings suggest that strengthening survivors’ benefits for households with limited resources could improve welfare across generations.

Keywords: Financial Distress; Health shocks; Household Debt; Household Saving; Intergenerational Transmission (search for similar items in EconPapers)
JEL-codes: D14 G22 G51 I12 (search for similar items in EconPapers)
Pages: 86 pages
Date: 2026-01-01
New Economics Papers: this item is included in nep-eur and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ifau.se/globalassets/pdf/se/2026/wp-20 ... ncial-well-being.pdf Full text (application/pdf)

Related works:
Working Paper: When Loss Strikes Twice: Severe Health Shocks and Financial Well-Being (2026)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:ifauwp:2026_011

Access Statistics for this paper

More papers in Working Paper Series from IFAU - Institute for Evaluation of Labour Market and Education Policy IFAU, P O Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Malin Lindkvist ().