Brownbag Seminar: Maria Plakhtieva
| Dates: | 28 October 2026 |
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| Times: | 13:00 - 13:50 |
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| What is it: | Seminar |
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| Organiser: | School of Social Sciences |
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Title: How do acute health shocks impact individual preferences? Evidence from Employment Decisions.
Author: Maria Plakhtieva
Abstract: This paper studies whether acute health shocks alter the intertemporal preferences that govern employment, leisure, and consumption decisions. I combine British Household Panel Survey and Understanding Society data with a life-cycle consumption and labour-supply model. The empirical design first documents dynamic changes in labour-market outcomes around the onset of cancer, stroke, or heart attack. I then estimate the model’s intratemporal, Frisch, and Euler-equation restrictions using a three-step generalized method of moments procedure, comparing treated individuals with an entropy-balanced comparison group. The event-study evidence shows a reduction in labour-market activity after the shock, while consumption responses are comparatively muted. The structural estimates imply a shift in the consumption–leisure trade-off, with the utility weight on nondurable consumption falling by 2.3 percentage points for men and 1.9 percentage points for women. The marginal utility of consumption also becomes more sensitive to health, with the corresponding elasticity rising by 0.92 for men and 0.30 for women. The estimates imply no evidence of present bias and little evidence that the age gradient in patience differs between treated and comparison individuals. The preferred estimates suggest, however, that the evolution of discounting differs after an acute health shock, particularly for women. Relative to the comparison group, the annual discount factor falls by about 0.01 for men and 0.03 for women. Overall, the findings suggest that health shocks may alter both intratemporal and intertemporal preferences, with the strongest statistical evidence pointing to a shift in the relative valuation of consumption and leisure.
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Arthur Lewis_G.020/G.021
Arthur Lewis Building
Manchester
