Households in sub-Saharan Africa face substantial health risk. This threatens their welfare
and predisposes them to poverty. Despite the high risk environment, they have little or no
access to social protection–a set of programs that aims to reduce health risk and provides
insurance against its effects, key of which are reductions in labor income and increases in
household health expenditure. In childhood, health risk may have additional effects; it lowers
cognitive abilities as well as educational attainment and these effects persist in adulthood,
working to permanently lower lifetime economic outcomes. Yet still, children from poorer
backgrounds face a disproportionately larger share of childhood health risk.
In this thesis, I examined the extent to which households are protected from the welfare effects
of health shocks (illness and injury) in Zambia. I also evaluated some social protection
policies focused at the general population and specific groups such as children and individuals
from low socioeconomic background. This was achieved in three sub-studies, each of
which forms a separate paper. The first one assessed the effect of health shocks on household
consumption, income, and health spending, as well as the extent to which households use
borrowing and selling assets as coping strategies in the absence of complete social protection
systems, during and after structural adjustment reforms (SAPs). Using data from four waves
of the living conditions monitoring survey (LCMS) in the period 1996–2006, it was found that
health shocks were associated with reduced consumption both during and after structural reforms.
Although health shocks were substantially associated with reduced labor income in
both periods, the effect on health spending was much greater after the structural reforms. Middle
income households were especially vulnerable. To cope with this risk, household employed
informal borrowing and selling assets as self insurance mechanisms.