The effect of health shocks on Chinese urban household assets portfolio behavior

This paper study the effect of health shocks on Chinese urban household assets portfolio behavior by PROBIT and TOBIT model, using newly data from China Health and Retirement Longitudinal Study (CHARLS). In particular, we investigate the influence of health shocks on a household´s prabability of various assets and on the share of total assets held in each asset class. The results show that health shocks have a significant effect on urban households assets portfolio. We find that households increase their ownership of financial assets. Chronic health shocks may also cause urban households to increase the holding of financial assets to deal with health risks, while acute shocks may cause households to reduce holdings of other physical assets and risky assets.