The causal effect of crisis events on health and economic outcomes

Abstract

In recent decades, an increasing number of crisis events, especially epidemics, economic crisis and natural disasters, have provoked socioeconomic upheaval and human suffering on an unprecedented scale, which emphasises the urgent need for crisis preparedness and management as well as raising public awareness of the potential risks of crisis events. In view of the importance of conducting cost-benefit analysis of crisis events which can inform evidence-based policy making associated with effectively coping with crisis, this thesis evaluates the causal effect of the Severe Acute Respiratory Syndrome (SARS) epidemic, fiscal austerity policies and wildfires on financial market performance, health outcomes of older people as well as adverse health conditions among the elderly and neonates respectively by using causal inference methods. Specifically, to assess the causal effect of SARS on Chinese A-share returns and systematic risk of each sector, the empirical analysis adopts the canonical difference-in-differences (DD) and difference-in-differences-in-differences (DDD). As for estimating health costs of fiscal austerity in Europe, the study employs extensions of DD and DDD with continuous treatment intensity at the country and individual level. In terms of assessing health consequences induced by wildfires in US, the research applies DD, two-way fixed effects approach as well as a DID+, t estimator suggested by de Chaisemartin and D’Haultfoeuille (2020) which considers heterogeneity of treatment effects of wildfires across counties and over time. In terms of economic costs of epidemics, the empirical findings show that SARS epidemic had a negative effect on A-share returns in the entire stock market and in sectors including consumer discretionary, health care, industrials, and utilities. No sectors benefited from the SARS epidemic. There is also a significant increase in the systematic risk of the financials sector, whereas the systematic risk of the communication services and utilities is not influenced by SARS. As for health costs of fiscal austerity, the results indicate that fiscal austerity led to poorer self-perceived health and limited access to outpatient healthcare services indicating lack of diagnostic medical checks among the elderly, which may explain the null or positive impact of fiscal austerity on several indicators of physical and mental health since older people were not informed of their own physical or mental health issues while health indicators are self-reported. With respect to health impact of wildfires, results demonstrate that maternal exposure to large wildfires results in a slightly larger probability of developing other circulatory or respiratory anomalies among newborns, a higher likelihood of low birth weight, and a marginally increased probability of prematurity. When considering wildfires of different sizes, evidence show that wildfires induced a reduced risk of developing omphalocele and cleft lip for infants, a small rise in the length of gestation as well as a higher risk of macrosomia. Moreover, older people exposed to wildfires experienced asthma symptoms more often and suffered from a longer period of poor mental health. Wildfires also led to physical inactivity for senior citizens. In terms of the main contributions, this thesis investigates the effect of crisis events on a wider range of health outcomes of the elderly and neonates which receive scant attention in previous research. The thesis also studies the impact of epidemics on stock market performance of every sector, some of which are not considered in preceding literature. In addition, special attention is paid to vulnerable populations including the elderly and neonates. Methodologically, preceding research mainly adopts correlational methods, whereas in this thesis, the causal inference methods are used to more accurately identify the costs or benefits induced by crisis events and inform evidence-based policy making.

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ORCID for Emmanouil Mentzakis: orcid.org/0000-0003-1761-209X

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