American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Breaking Bad: How Health Shocks Prompt Crime
American Economic Journal: Applied Economics
(pp. 88–119)
Abstract
Exploiting plausibly exogenous variations in the timing of cancer diagnoses, we establish that health shocks elicit a large and persistent increase in the probability of committing a crime. This effect materializes in a substantial rise in both first crimes and re-offenses. We uncover evidence for two mechanisms. First, an economic motive leads individuals to compensate the loss of legal revenues with illegal earnings. Second, cancer patients face lower expected cost of punishment through a lower survival probability. Welfare programs that alleviate the economic repercussions of health shocks are effective at mitigating the ensuing negative externality on society.Citation
Andersen, Steffen, Elin Colmsjö, Gianpaolo Parise, and Kim Peijnenburg. 2026. "Breaking Bad: How Health Shocks Prompt Crime." American Economic Journal: Applied Economics 18 (1): 88–119. DOI: 10.1257/app.20220769Additional Materials
JEL Classification
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- G22 Insurance; Insurance Companies; Actuarial Studies
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- I12 Health Behavior
- I13 Health Insurance, Public and Private
- K42 Illegal Behavior and the Enforcement of Law