Shared Burden, Separate Scars

Abstract

Job loss damages household members in different ways at different times. The household-finance literature has long modelled the economic cost of unemployment as a function of foregone earnings and consumption smoothing, yet the lived experience of families facing income shocks suggests that the dollar value of lost income is only part of the welfare story. The other part (financial-anxiety contagion across the household, from the earner to the partner to the children) has been harder to measure and largely absent from welfare estimates.

This paper traces the full cascade. Using longitudinal household panel data, we deploy a hybrid competing-risk hit model that combines Cox survival analysis with DeepHit neural networks. The hybrid framework is needed because no single classical method can trace the cascade from a single job-loss event through seven distinct categories of financial hardship to the differential anxiety responses of every household member. The behavioural construct at stake is intra-household psychological-anxiety contagion, the differential, time-staggered way that one member's economic shock propagates into the planning, sleeping, and saving behaviour of others.

The paper estimates how much of the post-shock welfare damage is psychological rather than monetary, and what that implies for the standard income-substitution measure of welfare cost, which captures none of it. The paper is a methodological flagship in the broader programme on intra-household financial dynamics and motivates an ongoing project translating each model coefficient into a corresponding lyric in a research-music collaboration, bridging academic finance and public communication.

Data & Methods