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Endogenous health risks, poverty traps, and the roles of health insurance in poverty alleviation

Author

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  • Pu Liao

    (Central University of Finance and Economics)

  • Xun Zhang

    (School of Insurance, Central University of Finance and Economics)

  • Wanlu Zhang

    (School of Insurance, Central University of Finance and Economics)

Abstract

Background Family education investment is a key factor in reducing intergenerational transmission of poverty. At the price of higher health risk, the poor may overdraw their bodies to earn more money to invest in education. This study investigates the effect of physical overdraft, health risks and health insurance on poverty and economic growth. Methods This paper proposes an economic development model of endogenous health risks and poverty by setting up a physical overdraft decision. Furthermore, we introduce mutual health insurance mechanism to analyze its poverty alleviation effects. Results First, this study shows that health risks weaken the economy and are among the leading causes of poverty. Second, mutual health insurance can alleviate, but not completely eliminate, the negative impact of health risks on the economy. Third, appropriate health insurance arrangements can lift some or even all poor households out of poverty. Conclusion Health risks have a significant effect on poverty. Furthermore, health insurance mechanisms have the advantages of transferring health risks, reducing poverty and improving health equity.

Suggested Citation

  • Pu Liao & Xun Zhang & Wanlu Zhang, 2022. "Endogenous health risks, poverty traps, and the roles of health insurance in poverty alleviation," Health Economics Review, Springer, vol. 12(1), pages 1-15, December.
    • Handle: RePEc:spr:hecrev:v:12:y:2022:i:1:d:10.1186_s13561-022-00370-2
    DOI: 10.1186/s13561-022-00370-2
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    References listed on IDEAS

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    1. Christoph Lakner & Daniel Gerszon Mahler & Mario Negre & Espen Beer Prydz, 2022. "How much does reducing inequality matter for global poverty?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(3), pages 559-585, September.
    2. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
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    Cited by:

    1. Haiyan Jia & Xiaoyu Sai & Yangyue Su & Ying Huang, 2022. "Measurement and Decomposition of the Health Poverty of Rural Residents in China," IJERPH, MDPI, vol. 19(19), pages 1-20, October.
    2. Alexander Karaivanov & Benoit Mojon & Luiz Awazu Pereira da Silva & Robert M Townsend, 2023. "Digital safety nets: a roadmap," BIS Papers, Bank for International Settlements, number 139.
    3. Xiao Ling & Luanfeng Wang & Yuxi Pan & Yanchao Feng, 2023. "The Impact of Financial Literacy on Household Health Investment: Empirical Evidence from China," IJERPH, MDPI, vol. 20(3), pages 1-23, January.
    4. Jinghua Sun & Peng Cheng & Zhaoxu Liu, 2023. "Social Security, Intergenerational Care, and Cultivated Land Renting Out Behavior of Elderly Farmers: Findings from the China Health and Retirement Longitudinal Survey," Land, MDPI, vol. 12(2), pages 1-22, January.
    5. Rashid Naweed & Muhammad Kashif Saeed & Hashim Ali, 2022. "Impact of Human Capital on Poverty Reduction in Pakistan," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 4(3), pages 419-428, September.
    6. Jie Song & Yaping Cai & Yahong Wang & Salim Khan, 2022. "Health Risk, Income Effect, and the Stability of Farmers’ Poverty Alleviation in Deep Poverty Areas: A Case Study of S-County in Qinba Mountain Area," IJERPH, MDPI, vol. 19(23), pages 1-15, November.

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