A Competing Risk Model for Health and Food Insecurity in the West Bank

This paper explores the interactions between the risk of food insecurity and the decision to health insure in the Palestinian Territories. The risk of adverse health conditions is insurable; the risk of food insecurity is a background risk and no market insurance exists. The vulnerability to food insecurity influences the individual utility from health insuring. We present a competing risk model to reveal this interdependence. We specify the empirical model as a bivariate probit model and evaluate the impact of food insecurity on the household decision to health insure. We find evidence of significant complementarity between the risk of food insecurity and the propensity to health insure. The predicted conditional probabilities reveal that the propensity to health insure is higher in presence of food insecurity among Palestinian households. This study shows that, in presence of a background risk, there are complementarities among risks that policy should be mindful of.