Health Risk And Family Economic Decision-making Behavior

The family is a basic economic unit.Families are the most powerful factor in changing personal financial decisions.Decision-making of families and individuals is influenced by irrational characteristics,various circumstances and time.Differences in individual consumption views,risk attitudes,and capital allocation will lead families to make different behavioral decisions.Therefore,changes in personal characteristics will affect the family’s decision-making behavior.Economic models incorporate the study of financial decisions such as income,spending,saving,borrowing,asset accumulation,and investment,mostly at the individual or household level.Economic decision-making models can be divided into collective decision-making model(Collective Model)and single decision-making model(Unitary Model).The so-called family decision-making(Family Decision Making)is the process in which two or more family members make purchase decisions directly or indirectly.Especially married families,individuals(husband or wife)and joint decision making.Combined with the characteristics of traditional clan and family culture in my country,family behavior decisionmaking takes into account both personal and family effects.Affected by factors such as declining birth rate,declining death rate,and increasing life expectancy,China’s aging rate is advancing at a faster rate than developed countries.The health of the elderly deteriorates with age,and they face health risks such as disease or death.In the case of the widespread popularization of social medical insurance in my country,serious health shocks will still lead to a sharp increase in out-of-pocket medical expenses of elderly families,consume a large amount of family wealth,change risk preferences and future expectations,thus affecting family labor,consumption,Allocation decisions on savings and other assets.The new crown pneumonia that is raging around the world has fully proved that health shocks not only affect the economic activities of families,but also have a huge impact on the economic operation of the whole society.Due to differences in natural environment,economic development,population quality,and infrastructure in different regions,there may be certain differences in regional population health levels.Therefore,regional labor characteristics and economic and financial development may have heterogeneity characteristics.This paper carries out four areas of work.First,the paper develops the model of Endogenous Growth that includes human capital and includes.Models include physical capital and human capital.Residents maximize utility under a budget constraint.After introducing human capital into the model,the relationship between health risk and labor supply,savings rate,and risk j asset allocation is quantified through theoretical model derivation.Second,this paper analyzes the relationship between health risk and labor supply using four periods of unbalanced panel data from the China Health and Retirement Longitudinal Survey(CHARLS)2011-2018,and explores the relationship between the two depending on the nature of residents’ units,gender,and urban and rural labor markets differently.In addition,this paper extends the study of health risk and labor supply to the macro level,analyzes the relationship between regional population health status and regional labor supply scale and supply quality using macro provincial data,explores whether there is regional heterogeneity in the relationship between the two,and analyzes in what ways regional residents’ poor health status affects regional labor supply.Finally,the buffer measures implemented by the residents and the government are examined for both the micro level and the macro level.Third,this paper analyzes that health risk may reduce household income and increase household expenditure,and as a result,households have less money available for saving,using mixed cross-sectional data from the China Family Panel Studies(CFPS)for the years 2014,2016,and 2018.We explore the intrinsic influences of health risk and household savings and analyze the relationship between health risk and household savings heterogeneity at different disease levels and income levels.The paper also looks for different buffers and analyzes their comparative advantages.Based on this,the paper extends the discussion to the macro level by analyzing the relationship between regional population health status and saving rates and analyzing the saving outcomes of population health status in the East,Middle and West and at different economic levels.Fourth,this paper uses mixed cross-sectional data from the China Household Finance Survey(CHFS)for 2013 and 2015 to analyze the relationship between health risks and the proportion of market participation and holdings of risky assets,analyzes the heterogeneity of health risks and risky assets at different ages and education levels,and discusses the subjective perceptions in the two We also discuss the channels of influence of subjective perceptions in the relationship,and decompose them on this basis to find the subjective factors with the greatest contribution.This paper extends the discussion of health risk and risky asset allocation to the macro level,and uses provincial panel data to analyze the relationship between population health status and regional financial development,and explores the mechanism of the role of regional population.This paper finds,first,that human capital is divorced from physical capital and incorporated into the model of Endogenous Growth.Residents need to choose between physical and human capital in each period to maximize lifetime utility.The first-order conditions are obtained by establishing Lagrangian functions through utility functions and budget constraints to derive the relationship between health risks on labor supply,savings,and the proportion of risky asset holdings.The theoretical model derivation yields that the relationship between health risk and labor supply is yet to be discussed,while it is negatively related to both savings and the proportion of risky financial asset assets held.Second,health risks will reduce the labor force participation rate of residents and shrink the labor supply time.Compared to stable units such as government departments and stateowned enterprises and institutions,workers in non-stable units such as private enterprises,individual entrepreneurs and social organizations are affected by health risks and are more likely to drop out of the labor market.The labor force participation rate of Chinese men is much higher than that of women,and the employment expectation of men is higher than that of women.This will lead to a relatively lower probability of re-employment for men.Compared to urban labor markets,rural labor markets are less compliant and less secure,and labor supply behavior in this market is more likely to fluctuate due to adverse health conditions.Regional population health conditions affect the scale and quality of local labor supply.Poor health status affects labor supply scale and supply quality by reducing the number of regional scale enterprises and crowding out educational human capital inputs,respectively.In terms of regional distribution characteristics,the impact of poor health status on labor supply shows the regional characteristics that the east is larger than the central than the west.Third,health risks can compress household non-medical expenditures,causing fluctuations in household income and ultimately leading to lower household savings rates.Health risks can affect household savings rates by reducing the number of people working outside the home.Health risks can cause the number of outworkers to return home due to illness,and the resulting reduction in income and non-medical expenditures,and a decline in the household savings rate.All three buffers,health insurance,government assistance,and credit,have a buffering effect on health risk.For the household saving rate,there is no substitution effect among the three buffers.An analysis of the comparative advantages of the three buffers reveals that health insurance hedges all levels of health risk and has a buffer effect for households at all income levels.Government and social assistance have a buffer effect only for low-income households.Borrowing has a buffering effect only for medium to high health risks and for medium to high income households.When extending the discussion to the macro level,the regional population’s poor health level has a negative moderating effect on the savings rate of the population.When the regional population health level decreases by 1%,the overall residential savings rate decreases by 10.4%.In particular,the savings rate decreases more in the central region than in the eastern and western regions.Compared with high-income regions,the savings rate in low-income regions fluctuates more by the impact of residents’ poor health.Fourth,investors’ poor health status reduces the probability of participating in the risky asset market and the percentage of holdings.Retired and low-education groups have a higher probability of health risks and are more likely to exit the risky asset market and reduce the percentage of risky asset holdings.Health risk indirectly affects household risky asset market participation and holding ratio through subjective perceptions(risk attitude,happiness).Happiness is one of the most contributing indirect factors,followed by risk attitude.The impact of health risk on the proportion of risky asset holdings increases with increasing risk aversion and decreasing happiness.The level of poor health of the Chinese population robustly(and significantly)negatively affects financial development.For every 1% decrease in poor health status,marketability decreases by 1.4% and financial marketability decreases by 5%.The extent of the impact of ill health on financial development shows a regional pattern of greater impact in the central than in the eastern than in the western regions.Regions with higher levels of aging face higher levels of health risks.Therefore,the impact of poor health status of the population on financial development is greater in this region.Based on the findings of this paper,policy recommendations are put forward: first,attach importance to workers’ life safety and build harmonious labor relations with Chinese characteristics.In particular,the basic rights of private enterprise workers should be maintained,the rural labor market should be regulated,and the gap between urban and rural labor markets should be narrowed.While focusing on employee benefits,the government and enterprises should also take into account the development of educational human capital.Secondly,we should increase efforts to help poor families due to illness and prevent the return of poverty after getting out of poverty.Urban and rural medical coverage concerns the immediate interests of the people and is an important measure to reduce poverty and return to poverty due to illness.Due to the large population movement in China,it is recommended to optimize the process of reimbursement for medical treatment in different places and streamline the working process.Taking industrial transfer as an opportunity,the central and western regions should accelerate regional human capital accumulation to pave the way for the introduction of high-tech products.Third,popularize financial knowledge,improve residents’ financial literacy,and allocate family assets reasonably.Pay attention to the "human" factor and enhance residents’ subjective sense of well-being.Small and medium-sized enterprises should cherish and value the human resources they have,and carry out annual medical checkups to improve the health of employees and motivate them to work.