Impact of health shocks on household consumption structure

Abstract

Introduction: In the aftermath of the pandemic, the impact of health shocks on household expenditure patterns has become a critical area of focus due to the heightened uncertainty surrounding consumers' expectations. Household medical expenditures have emerged as a key factor in the evolving consumption structure. Method: This research developed a practical framework to assess the influence of health shocks on family spending patterns, focusing on health shortfalls. Health emergencies were measured through randomized medical spending. Data was sourced from the 2010-2018 Wave 5 Statistical Report of the China Family Panel Studies (CFPS), which included a total of 25,809 participants. Results: The findings revealed that health shocks significantly increased the proportion of household spending on medical expenses. Concurrently, sub-expenditures such as food and education were reduced to varying degrees as households adjusted their consumption patterns to mitigate the impact of health shocks. The effects of these shocks were more pronounced in low-income households and those with health insurance. Discussions: The government should take steps to promote public health, reduce the burden of medical expenses resulting from health shocks, and unlock the consumption potential. Additionally, efforts should be made to boost economic growth and systematically upgrade household consumption patterns to effectively cushion the impact of health shocks.

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