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Advances in Social Sciences Research Journal – Vol. 10, No. 4
Publication Date: April 25, 2023
DOI:10.14738/assrj.104.14533.
Abdulaleem, M. A., Fakayode, S. B., & Adio, M. O. (2023). Effect of Income Shocks on Households’ Health and Consumption: A Case
Study of Civil Servant Farming Households in South West, Nigeria. Advances in Social Sciences Research Journal, 10(4). 377-389.
Services for Science and Education – United Kingdom
Effect of Income Shocks on Households’ Health and Consumption:
A Case Study of Civil Servant Farming Households in South West,
Nigeria
Abdulaleem, M. A.
Department of Agricultural Economics and Extension,
Faculty of Agriculture, Federal University Oye Ekiti.
Ekiti State, Nigeria
Fakayode, S. B.
Department of Agricultural Economics and Extension,
Faculty of Agriculture, Federal University Oye Ekiti.
Ekiti State, Nigeria
Adio, M. O.
Department of Agricultural Economics and Extension,
Faculty of Agriculture, Federal University Oye Ekiti.
Ekiti State, Nigeria
ABSTRACT
Income shocks have continued to aggravate conflicts in several parts of Nigeria and
many other countries of the world. The frequent occurrence of income shocks
among the populace coupled with a lack of effective coping mechanisms has
increased the households’ vulnerability to poverty, poor health, and lower food
consumption. This study examined the effects of income shocks on health and
consumption as well as the coping mechanisms adopted by the farming civil servant
households in Southwest, Nigeria. A multistage sampling technique was used to
select 360 farming Civil Servants used in the study. A combination of Descriptive
Statistics and the Likert Scale was used for the data analysis. The result revealed
that deteriorating health conditions ( = 3.79) and reduced food consumption ( =
3.28) were the major consequences of income shocks in the study area. The study
further revealed that sales of assets or property ( =2.59) and sourcing financial
support from affiliated religious bodies ( =2.59) remains the most common coping
strategies adopted by Civil Servants to mitigate income shocks in the study area.
Therefore, the study recommended the institutionalization of a Health Insurance
Scheme for Civil Servants to provide adequate and easy access to health care. Also,
to avoid assets and property loss, improving the standard of living of civil servants
through prioritized salary payment, access to the loan market, and empowerment
using incentives become imperative.
Keywords: Income Shock, Health, Consumption, South-West, Nigeria.
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 10, Issue 4, April-2023
Services for Science and Education – United Kingdom
INTRODUCTION
A shock is an event that can trigger a decline in well-being which can affect individuals,
communities, regions, and nations (World Bank, 2010). A shock refers to a risk that causes
significant negative welfare effects like major income loss or major illness-related loss. In
economic terms, shocks can result in income or asset loss. Shocks can also cause other disutility
like pain and grief. According to [1], income shocks are the key drivers of conflicts, but the
direction of their effect is contentious. Civil conflicts such as general strikes, violent riots, and
civil wars have become the most common phenomena throughout the world, particularly in
developing countries, causing incidences of mass fatality and destruction to the natural
environment, physical infrastructures, human capital, social and political institutions.
According to [2], the majority of rural households that are mostly engaged in agriculture, are
particularly prone to ecological shocks like drought, flooding, crop pests, and livestock diseases,
which impact negatively their output and in turn reduce their receipts from agriculture.
Similarly, they are also more exposed to health shocks, illness, and death of household members
[2,3].
In developing countries, health shock is one of the most common idiosyncratic income shocks
and the main reason why households fall into poverty. Empirical research has shown that in
some African countries, households are unable to access formal markets in order to insure their
consumption against health shocks. In research carried out by [4], to investigate the factors that
lead to welfare loss from health shocks, and how to break the vulnerability from health shocks
in three Sub-Saharan Africa (SSA) countries, namely, Burkina Faso, Niger and Togo, the result
showed that about 39.04 percent 33.69 percent and 69.03 percent of households were
vulnerable to poverty in Burkina Faso, Niger, and Togo respectively. Interaction variables,
'health shocks and wealth' and 'health shocks and access to health insurance' had a significant
negative effect on reducing a household's vulnerability to poverty. Health insurance coverage
had a significant effect by increasing the incidence of welfare loss from health shocks.
Household size, type of health care used, gender, education and the age of the household head
as well as the characteristics of housing affect vulnerability to poverty.
Health, being a central part of individual human capita has direct and indirect implications for
human well-being and utility. In developed countries, an economic meltdown may result in
reduced household consumption of nutritious food and lower expenditure on other inputs.
After a health shock, individuals are more likely to transit into labour market inactivity and into
disability [5,6], health shocks are also found to decrease individual earnings [5, 7]. Health
shocks are unpredictable illness that declines the health status of households. These are one of
the most important factors connected with poverty in African countries.
Farm households in rural areas of Nigeria are naturally prone to various forms of idiosyncratic
and covariate shocks. The frequent occurrence of shocks among the households coupled with a
lack of effective shock coping mechanisms in the region has made the households vulnerable to
poverty [8]. Households facing health shocks may find themselves permanently impoverished
due to loss of income associated with illness and the cost of access to health care. Health shocks
are sudden deterioration of an individual’s health, caused by illness and injury. Households
facing health shocks are often affected by both the payments for medical treatment and the
income loss from an inability to work.
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Abdulaleem, M. A., Fakayode, S. B., & Adio, M. O. (2023). Effect of Income Shocks on Households’ Health and Consumption: A Case Study of Civil
Servant Farming Households in South West, Nigeria. Advances in Social Sciences Research Journal, 10(4). 377-389.
URL: http://dx.doi.org/10.14738/assrj.104.14533
Health shocks and their associated costs have both short- and long-term impacts on household
welfare. In the short term, households facing health shocks are forced to substitute consumer
and production spending for health care. In the long term, net flows of investment in productive
activities tend to decrease. In the process, there is a possibility that health shocks may lead
households to poverty or make them even poorer in the near future. Households use a range of
sources such as income, savings, borrowing, using loans or mortgages, and selling assets and
livestock to meet out-of-pocket health spending [9]. According to [10], Health shocks can place
a double financial burden on households, not only having to bear the costs of medical treatment
but also the income loss from the inability to work. The combination of catastrophic healthcare
expenditures and foregone earnings can cause households to slide below the poverty line or
even deeper into poverty [7].
Households have to employ a series of strategies to cope with the incidence of shocks in
situations where health payments cannot be completely financed through current income.,
informal coping strategies, such as depletion of assets and buffer stocks, or utilization of social
networks that leads to more debt can have long-term negative effects for the household’s
income generating capacity and their ability to cope with future shocks [11]. Moreover, when
households are faced with covariate shocks and chronic illness, coping mechanisms become
less effective, and informal insurance fails [12]. In effect, some households may be forced to
forgo treatment altogether because of a lack of assets and social networks, which may have
long-term consequences through reduced health and depreciation of human capital.
SIGNIFICANCE OF THE STUDY
Income shocks have long been an issue in Nigeria. This is more so for those in the formal sector
of the economy. Civil Servants in various Nigerian states have been receiving poor, shortfalls
and even failing remunerations, especially in the last few challenging years of Covid-19 and
economic meltdown. The whole society has therefore become affected one way or the other.
Civil Servants and those who depend on their expenditures have become vulnerable to many
challenges. This has placed a big challenge and worries on most families, especially those in the
agrarian parts of the country. In recent times, Civil Servants are generally underpaid in Nigeria,
and they have had to make do with other forms of livelihoods to make ends meet, to enable
them to sustain themselves and their families.
Yet, poverty has taken up a rural face, even at the doorsteps of the Civil Servants in these
localities. This has become a major issue regarding the effects caused by dwindling income,
financial instability, and ways to mitigate income shocks among farming Civil Servants in
Nigeria. Furthermore, incessant delays in salaries and other forms of family earnings have
exposed families to many financial risks that have pushed them to borrow money from any
available sources, to meet up with the family needs and usually at high exploitative interest
charges. The failure of the Government of Nigeria to pay workers’ salaries has therefore
continued to occasion severe deprivation, mental, and physical health challenges to most of the
Nigerian Civil Servants and of course their families’ consumption. This study provides empirical
information on the consequences of this income shortfall on the health and consumption of
farming Civil Servants in Southwest Nigeria.