Household responses to health risks and shocks: A study from rural Tanzania raises some methodological issues

The impact of a health shock (malaria) on household consumption patterns is investigated using a system of demand equations. After controlling for the overall levels of total expenditure by a household, the presence of a self-reported malarious individual in a household reduces consumption of luxury items and increases consumption of health care and products. Our results are compatible with the hypothesis that households behave strategically when coping with an illness related shock so as to minimise its impact on expenditure on necessities: if households need to re-allocate funds to health and health care products, they reduce consumption of luxury items.