Financial resilience of two‐worker households from a health perspective

Abstract

AbstractThe COVID‐19 pandemic highlighted the significant impact of health conditions on household finance. Traditional measures of financial resilience ignored households' ability to adjust to labor income disruptions. We proposed a more comprehensive two‐tier measure of financial resilience by accounting for nonlabor income and spending adjustments in the face of income loss associated with health situations. Using this measure, we evaluated the financial resilience of two‐worker households with members having COVID‐19 health risk conditions and other mental and physical chronic diseases. Our findings showed that households with cancer patients were more financially resilient yet those having obese members were less financially resilient. Decomposition of the financial resilience measure revealed differences in financial resources allocation—households with cancer patients allocated more wealth to noncash financial assets, whereas households with obese members saved less and spent more. Our findings shed light on financial planning practices and public policies of emergency assistance.