Institutional deficit and health outcomes in post-communist states

In this paper we draw upon the unique natural experiment of post-communist transitions to show how the interaction between democratization and economic liberalization impacts health. We argue that, if occurring simultaneously, these transformations reduce overall uncertainty and thus improve health. Two concrete mechanisms are at work: first, people suffer less from stress related diseases, and second, they start investing more in their own health. To capture the proposed theoretical mechanisms, we use stress-caused mortality and private expenditures on health as our dependent variables. Empirically, we employ mediation analysis with country and time fixed effects. We find that, ceteris paribus, democratization and economic liberalization exert a cumulatively positive impact upon health. Our findings should be relevant to other countries that undergo politico-economic transitions.