Monthly income volatility and health outcomes

Neil Bania and Laura Leete

Contemporary Economic Policy, 2022, vol. 40, issue 4, 636-658

Abstract: A growing literature shows that income volatility has negative effects on household well‐being. Using the Survey of Income and Program Participation, we use temporal ordering to investigate the relationship between monthly household income volatility and the subsequent change in self‐reported health status of the household head. For liquidity constrained households, a one standard deviation increase in volatility over 24 months leads to a 1.3%–4.3% increase in the probability of worsened health. The magnitude of this effect is approximately two‐thirds that of the impact of a one standard deviation change in the level of mean household income.

Date: 2022
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https://doi.org/10.1111/coep.12580

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