Health shocks and financial vulnerability of the Spanish population under review

Marcos Álvarez-Espiño, Lucía Rey-Ares, Sara Fernández-López



Purpose: A health shock could be defined as an adverse and unexpected event that alters household income and expenditure flows. Compared to other health problems, the emergency that characterizes shocks can generate an important “psychological alarm” that leads people to make unhealthy financial decisions. This article explores the relationship between health shocks and financial vulnerability (VF) of Spanish households.

Methodology: Using a descriptive quantitative methodology, this paper aims to compare the level of VF, measured from different approaches, in households with or without health shocks. To design the VF indicators, we have chosen procedures to synthesize information from a plethora of variables.

Findings: The results show a possible positive relationship between household VF and health shocks, which could be more intense in objective measures that analyze household consumption/savings. An increase in public aid is recommended, prioritizing the most vulnerable households.

Originality: This article contributes to research on household finances by relating synthetic indicators of household finances to health shocks. To date, most authors who have explored the relationship between health and household finances have focused on the health consequences derived from the absence of resources and/or have analyzed specific financial decisions.

Keywords: financial vulnerability; health shocks; financial stress; nonlinear principal component analysis; Spain.

Acknowledgments: Marcos Álvarez-Espiño expresses gratitude for the financial support from the Ministry of Universities of Spain through the FPU program (Grants for University Teaching Training) [FPU21/03287].



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