Reported by Amanda Spiller ‘17 

When health problems threaten, how do American families cope? According to Dan LaFave, a professor of economics at Colby College, we deal with health risks not just through formal insurance but by working longer and harder, drawing down assets, and turning to family and community when illness strikes.

LaFave came to Bowdoin on Nov. 13 to present the lecture Mitigating the Consequences of a Health Condition: The Family in the PSID as part of the economics department’s seminar series.  LaFave’s research correlates with topics studied by students in Rachel Connelly’s class “Economics of the Family” and Deborah DeGraff’s class “The Economics of Development.”

LaFave and coauthor Michael Dalton from the Bureau of Labor Statistics are using the Panel Study of Income Dynamics (PSID) to investigate how households “smooth risks over time,” specifically health-related risks. This study, begun in 1968, asks families about memory loss, diabetes, asthma, cancer, and other illnesses, as well as the effects of the illness on the family.

LaFave and Dalton found that within a sample of 2,000 families, 18 percent reported experiencing severe limitations due to illness at some point within the many years of the panel study. Their research supports the claim that even in the United States, families serve as informal support systems by filling in the gaps left by formal health insurance. During times of illness, families may mitigate losses by taking in sick family members, increasing their own hours of employment on behalf of sick spouses, and increasing financial transfers.

The data demands of this study are substantial, LaFave explained. Even though the PSID has been collecting information from the same families for decades, LaFave and Dalton are still limited by a lack of data.  “We can only conduct this research for families experiencing poor health, not chronic illnesses,” LaFave said, because the model relies on observing how consumption patterns change with health status. He hopes to continue the research as the PSID acquires new areas of data.