How Health Risks Drive Household Economic Vulnerability: A Dual Perspective on Finance and Poverty

Frequent health events and rising household economic vulnerability highlight the importance of understanding how health risks impact economic stability. Using data from the 2016 to 2022 China Family Panel Studies (CFPS), this study investigates how health risks affect household economic vulnerability across two dimensions: finance and poverty risk. The analysis reveals that health risks significantly heighten economic vulnerability, primarily by weakening households’ financial positions rather than directly causing poverty. During the initial stages of COVID-19, health risks sharply increased households’ vulnerability to poverty; however, this effect gradually diminished over time, whereas the impact on financial vulnerability persisted consistently. Declining health status contributes to household vulnerability through three main pathways: higher medical expenses, lower income, and increased difficulty accessing credit. Heterogeneity analysis identifies that those with abundant material resources, robust social networks, comprehensive health insurance coverage, and well-developed digital finance systems primarily face heightened financial vulnerability. In contrast, households with limited material resources, social support, medical insurance coverage, and access to digital finance services are more susceptible to poverty risks. Additionally, the vulnerability impacts are stronger among households with older adults compared to others. JEL Classification: I12, D14.