Does social expenditure mitigate the effect of environmental shocks on health?

Objectives: The effectiveness oflocal government‘s socialexpenditure in mitigating the future use of health care resources is a relevant policy questionfor the National Health Service. Whethersocial expenditure may substitute, complement, prevent or postpone the use of NHS resourcesis seldom investigatedin the health economics literature,and previous studies lack evidence onthe impact of local government‘s social expenditure on health care use.This paper exploits exogenous environmental shocks (daily temperatures and earthquake events) to explore the relationship between local socialexpenditure and hospital admissions for different causes of disease and differentsocial groups. Data and Methods:To analyze the impact of social expenditure on hospital admissions we exploit detailed municipality-level data from Italy, wheredecisions on social expenditure are delegated to local governments and, therefore,provide a large source of heterogeneity across the country. This dataset is then combined with data from the universe of hospital admissionsfor mental healthand cardiovascular diseases for the period 2001-2015 aggregated by municipality. We use daily data on extreme temperature shocks and earthquake occurrences to identify exogenous hospital admission surges,and analyze if heterogeneity in past social expenditure causesdifferences in hospital admissions when climate and seismic shocks occur.This strategy allows us to overcome endogeneity due to reverse causality between hospitalizations and social expenditure.Finally, the detail of hospital admissiondata allows us to explore the effects ofsocial expenditure by socio-demographic groups. Results: Preliminary findings suggest that social expenditure mitigates hospitalizations with age-group specific effects.People in the age group 35-65 seem tobenefitmore from social expenditure than the oldest age cohorts.This is likely dueto the nature of local social expenditure,whichenhancesfamilies' financial well-beingbut is rather ineffectiveforsevere health problems.