Tansel Yilmazer

Health and Financial Strain: Evidence from the Survey of Consumer Finances

Using data from the Survey of Consumer Finances, this study examines the relationship between health status and financial strain controlling for the dual endogeneity between the two factors. Simultaneous two-stage probit models are estimated for self-reported health status and three measures of financial strain. The results from all three models indicate that poor health significantly increases the probability of financial strain. There is little evidence that financial strain contributes to poor health. The findings suggest that severe health conditions may result in larger financial burdens while large financial burdens are unlikely to accelerate a decline in health status. In the end, health may be contributing to widening financial disparities, especially among the poor who are in poor health.

A Multistage Model of Loans and the Role of Relationships

We develop a multistage model of the loan granting process to understand the contradictory findings of the existing literature on bank-borrower relationships, credit availability, and loan rates. Upon estimating our model with the 1993, 1998, and 2003 versions of the Survey of Small Business Finances data set, we find that relationships matter in a borrowers decision whether to apply for a loan and in the loan approval/rejection decision by the financial institution. However, the effect of relationships on loan rates depends on the prevailing economic climate. While firms with pre-existing relationships obtain credit at lower rates during periods of economic expansion, loan rates are not negatively correlated with pre-existing relationships during periods of economic recession.

The impact of diminished housing wealth on health in the United States: Evidence from the Great Recession

The sharp decline in home values in many industrialized and developing countries was one of the most evident facets of the global economic recession of 2008. Using data from the Panel Study of Income Dynamics (PSID) for 2007-2011, this study examines how the decline in housing wealth affected the psychological and physical health and health-related behaviors of 4007 U.S. households who were homeowners in 2007. We focus on two mechanisms that could account for how the drop in housing wealth affects health: increase in stress and negative changes in health-related behaviors. Controlling for the changes in non-housing wealth and employment status during the recession, the decline in housing wealth is associated with a small but statistically significant increase in psychological distress. Psychological health deteriorates more as the housing wealth relative to total wealth decreases. Finally, homeowners who have difficulties with mortgage payments report substantial increases in psychological distress and have higher rates of depression. These findings, combined with limited evidence of the change in health-related behaviors, suggest that the increase in stress is the main cause of the adverse health outcomes.

How Does Marriage Affect the Allocation of Assets in Women’s Defined Contribution Plans?

Past studies that examine gender differences in investment decisions have treated married households as a single decision- making unit. This study improves upon traditional unitary bargaining models and estimates a series of unitary and collective-type models to investigate how a husband’s age and relative control over financial resources affects the allocation of assets in women’s defined contribution plans. Using data from the Survey of Consumer Finances, the results show that women who are married to less educated and older men are less likely to take on risk with their portfolios. Women who earn a greater share of the household’s total earnings are also less likely to invest in risky assets. There is little evidence that the characteristics of the wife affect the husband’s investment decisions. The findings have important policy implications, especially with respect to proposed Social Security reforms which would enable workers to choose how their personal security accounts are invested.

Precautionary Savings Against Health Risks: Evidence From the Health and Retirement Study

The precautionary savings model predicts that households accumulate wealth to self-insure against unexpected declines in future income and unforeseen expenditures. The goals of this study are twofold. First, we investigate whether the near-elderly who face higher health risks save more. Second, we examine the factors that contribute to health risks that the near-elderly face. We use data from the Health and Retirement Study to construct two measures of health risks. Our results do not support the hypothesis that household savings increase with the health risks that they face. Individuals who confront higher health risks in the future are those who are already in fair or poor health status or those who have a health condition such as diabetes or lung disease. Lower earnings and high medical expenditures caused by current poor health status prevent households from accumulating savings for future health adversities.

The Impact of Financial Development on Homeownership and Housing in Emerging Economies: Evidence from Turkey

Abstract This paper aims to investigate the role of financial development on homeownership and housing in emerging economies. We construct a measure of regional financial development using data from the Survey of Consumer Finances in Turkey. Specifically, we estimate regional effects on the probability that a household does not have access to credit (i.e., are discouraged from applying for credit or their application was denied), and use these estimates to create an indicator of financial development. We find that homeownership increases with financial development in metropolitan areas. Home values, however, increase with financial development in both metropolitan and non-metropolitan areas. Our findings are robust to correction of potential endogeneity of our financial development measure. Our results are also robust to using the variation in the supply of credit across provinces as another measure of financial development.

Employment and Other Income Sources Among Homeless Youth

Homeless youth report high rates of unemployment. While homeless serving agencies usually offer employment services, most homeless youth are disengaged from homeless service agencies, and a limited number of studies have examined employment and other income sources among service disconnected youth. Our study examined income sources and change in income among service disconnected youth, all of whom received Strengths-Based Outreach and Advocacy (SBOA, N = 79). Findings revealed that over time employment and legal income from non-survival behaviors increased (e.g., governmental assistance and receiving income from friends and relatives), while income from survival behaviors decreased (e.g., prostitution, stealing, selling possessions, selling blood or plasma). Although unemployment among these youth remained high (62%), income from survival behaviors reduced most drastically. Findings also suggest that employment is linked to housing stability and mental health, as is substance use and income, which suggests that mental health, housing, and substance use treatment services are important components in income stabilization for homeless youth.

The impact of adverse health events on consumption: Understanding the mediating effect of income transfers, wealth, and health insurance

Using data from the Panel Study of Income Dynamics for years 1999-2013, we investigate the impact of physical and mental illnesses on household consumption and financial status. In comparison to severe physical health problems, mental illnesses lead to larger decreases in labor income. Increases in public and private transfers following the onset of a mental illness do not completely offset the decline in labor income. Consequently, we find a significant decrease in consumption expenditures after the household head experiences a mental problem. On the other hand, public and private transfers and accumulated wealth offset the relatively smaller decline in labor income and enable households with severe physical problems to smooth their consumption. Health insurance helps to prevent larger drops in consumption after the onset of a mental health problem.