Coping with the Incidence of an Infectious Disease: Household Strategies and Their Consequences

Jaikishan Desai, Victoria University of Wellington
Rhonda Sarnoff, Independent Consultant

An unexpected illness can impose an enormous economic burden on poor households, and their ability to withstand the shock and smooth consumption is crucially dependent on the coping strategies they employ. In this paper we use panel data from a large probabilistic incidence survey to examine the impact of an infectious disease - visceral leishmaniasis – on poor households in northeastern India; the disease is endemic in several parts of the developing world. We find that households employ multiple strategies to cope with the disease: they use savings, take on unsecured loans, sell assets, reallocate household expenditures, readjust household work effort to maintain income, and withdraw children from school to generate income. Using data on disease-affected households and a comparison group of households not affected by the disease, we are able to examine variation in the coping strategies and their differential effects on consumption smoothing over a 16-month period.