Panel Paper: Health Shocks and Mortgage Default

Saturday, November 9, 2013 : 2:05 PM
Mayfair Court (Westin Georgetown)

*Names in bold indicate Presenter

Jason Houle, Dartmouth College
Health Shocks and Mortgage Default

Jason N. Houle, Dartmouth College

This paper examines the relationship between health shocks, as measured by monthly flu outbreak data for 81 metro areas, and mortgage defaults as measured in quarterly zipcode level credit data. We find flu outbreaks are associated with an increase in defaults, controlling even for time varying controls and fixed effects. We also are able to show the effects hold using weather patterns as an instrument to predict flu outbreaks. Overall, it appears there is a causal relationship between negative health shocks and mortgage default. We further find immunization and health care coverage moderate these relationships. The results suggest that the financial industry and related markets could benefit from policies that result in a reduction in illness and improve health outcomes.