Are Recessions Good For Your Health?

Scucca · 07-10-08, 03:39 AM

Ruhm (2000, Quarterly Journal of Economics, Vol 115, pp 617-650) notes the following:

"This study investigates the relationship between economic conditions and health. Total mortality and eight of the ten sources of fatalities examined are shown to exhibit a procyclical fluctuation, with suicides representing an important exception. The variations are largest for those causes and age groups where behavioral responses are most plausible, and there is some evidence that the unfavorable health effects of temporary upturns are partially or fully offset if the economic growth is long-lasting. An accompanying analysis of microdata indicates that smoking and obesity increase when the economy strengthens, whereas physical activity is reduced and diet becomes less healthy"

There is always a positive!

donsutherland1 · 07-10-08, 09:32 AM

Scucca,

Christopher Ruhm's article is an interesting one. Given the ongoing economic downturns in Europe and in the United States, it arguably has added relevance.

For those who have not read the article, Ruhm documents an inverse relationship between macroeconomic conditions and health. He finds that for every 1% increase in the unemployment rate relative to its historic average, mortality declined by about 0.5% to 0.6%. He also noted that similar effects were found in national recessions and more localized downturns.

Some potential reasons cited by Ruhm for his findings included:

1. Economic upturns reduce leisure time, "making it more costly to undertake health-producing activities" e.g., exercise.

2. The incidence of work-related accidents increases during "temporary expansions."

3. Adverse health impacts could result from greater direct exposure to hazardous work conditions during "short-lasting economic expansions."

4. Reduced pollution from lowered economic output during downturns could lead to improved health outcomes.

Nevertheless, it is important to emphasize that Ruhm is comparing health outcomes between recessions and short-lived expansions (the business cycle not the secular or long-term trend for growth). He is not arguing that sustained long-term growth, which provides improved technologies, expanded scientific and medical knowledge, enhanced working conditions, among other benefits, does not enhance health outcomes. In fact, he writes, "...there is some evidence that sustained economic growth may improve health, even while short-lasting expansions worsen it." He also observes, "The evidence for developing countries strongly supports the prediction that lasting economic growth leads to better health."

Source: Christopher J. Ruhm, "Are Recessions Good for Your Health?" The Quarterly Journal of Economics, May 2000, pp.617-650.

Scucca · 07-10-08, 10:10 AM

Quote:

Originally Posted by donsutherland1

For those who have not read the article, Ruhm documents an inverse relationship between macroeconomic conditions and health. He finds that for every 1% increase in the unemployment rate relative to its historic average, mortality declined by about 0.5% to 0.6%.

He's also written a more up-to-date paper (A Healthy Economy Can Break Your Economy, 2007, Demography, Vol 44, pp 829-848) which finds that a 1% reduction in unemployment is estimated to increase coronary heart disease mortality by 0.75%. A right proper cheery fellow!

Quote:

Nevertheless, it is important to emphasize that Ruhm is comparing health outcomes between recessions and short-lived expansions (the business cycle not the secular or long-term trend for growth). He is not arguing that sustained long-term growth, which provides improved technologies, expanded scientific and medical knowledge, enhanced working conditions, among other benefits, does not enhance health outcomes.

But could we argue that the consequences of economic growth for health are changing? Consider, for example, Tapia and Ionides (2008, The reversal of the relation between economic growth and health progress: Sweden in the 19th and 20th centuries, Journal of Health Economics, Vol 27, pp 544-563) who conclude:

”Therefore, this investigation shows that, year to year, economic growth was strongly associated with health progress in Sweden in the first half of the 19th century, with the association becoming weaker and weaker in the next hundred years, to be substituted by a negative lagged association in the second half of the 20th century, in which economic growth has a negative effect on health progress with a short lag of about 1 or 2 years. There is no evidence of effects of economic growth on health at longer lags in any of the periods of the two centuries included in the study.

What might be the reasons that the decline in mortality, strongly stimulated by economic growth in 19th-century Sweden, becomes negatively affected by economic growth in the last half of the 20th century? A brief answer may be that economic growth and affluence strongly reduce mortality at the population level when most deaths are due to infectious disease (as in largely agricultural 19th-century Sweden), but that increased business and industrial activity induce higher death rates when most fatalities are due to such causes as cardiovascular disease, cancer, traffic injuries, diabetes, liver cirrhosis, and other pathologic processes related to work, consumption, or the environment.”

donsutherland1 · 07-10-08, 11:03 AM

Quote:

Originally Posted by Scucca

...Consider, for example, Tapia and Ionides (2008, The reversal of the relation between economic growth and health progress: Sweden in the 19th and 20th centuries, Journal of Health Economics, Vol 27, pp 544-563) who conclude:

”Therefore, this investigation shows that, year to year, economic growth was strongly associated with health progress in Sweden in the first half of the 19th century, with the association becoming weaker and weaker in the next hundred years, to be substituted by a negative lagged association in the second half of the 20th century, in which economic growth has a negative effect on health progress with a short lag of about 1 or 2 years. There is no evidence of effects of economic growth on health at longer lags in any of the periods of the two centuries included in the study...”

Just a matter of opinion, as I have not looked at the relationship between economic development and health outcomes in any degree of great detail, it would not surprise me if diminishing marginal returns manifest themselves in that relationship on account of some of the tradeoffs Tapia and Ionides mention.

Scucca · 07-10-08, 01:29 PM

Quote:

Originally Posted by donsutherland1

Just a matter of opinion, as I have not looked at the relationship between economic development and health outcomes in any degree of great detail, it would not surprise me if diminishing marginal returns manifest themselves in that relationship on account of some of the tradeoffs Tapia and Ionides mention.

Diminishing returns is more apt at explaining more general income/happiness relationships. Kaun (2005, Income and happiness: earning and spending as sources of discontent, Journal of Socio-Economics) gives a useful example via reference to leisure:

“Forty to fifty years ago, one could enjoy camping with little more than a tent, ice chest, lantern, and Coleman stove. These, along with a few books, a folding chair, and perhaps a fishing rod represented standard equipment. No longer. Today’s RV is decked with rafts, motorbikes, surfboards, scuba diving equipment and TV antennas. Inside, all the “comforts” of home, including TV, VCR and lap-top computer, leave little time for the Grishman novel lost somewhere in the clutter—if it was included at all. Never mind the negative externalities imposed on one’s crowded neighbors, all of whom have traded one dense urban environment for another. The pleasure derived from the vast array of “goods” will surely be diminished due to the time and annoyance their simple maintenance requires.”

However, whilst linked to this form of analysis, I think we should not underestimate the repercussions of the changes in the effects of economic growth. Ultimately, we've got an additional question mark for sustainable development. Rather than just referring to the general availability of factors of production, we have to consider the quality of the labour stock. As health problems intensify with economic growth, the strains on non-labour inputs also increase.

new coup for you · 07-10-08, 01:31 PM

That can't be right people start eating cheaper during recessions which means more ****ty fastfood.

Scucca · 07-10-08, 02:40 PM

Quote:

Originally Posted by new coup for you

That can't be right people start eating cheaper during recessions which means more ****ty fastfood.

I'm afraid the health studies do not support your point of view. Don't worry, they're also unprepared to accept my positive attitude over the abundant mixing of Belgian beer and yarpie wine

new coup for you · 07-10-08, 02:54 PM

but it's a fact that in the US obesity and diabetes are class related

Scucca · 07-11-08, 03:54 AM

Quote:

Originally Posted by new coup for you

but it's a fact that in the US obesity and diabetes are class related

You need to make a distinction between socio-economic comment and macroeconomic comment. With a boom, we're working the workers harder and appreciating the consequences on behaviour and outcome