This award is funded under the American Recovery and Reinvestment Act of 2009 (Public Law 111-5).
A series of influential papers by Christopher Ruhm document that recessions are good for your health or more specifically that state-level mortality rates are pro-cyclical. The magnitude of the correlation is economically meaningful: a typical estimate from the literature suggests that a one percentage point increase in the unemployment rate of a state is associated with a 0.54% reduction in the mortality rate of that state, which would translate into about 12,000 fewer deaths per year. This provocative finding immediately raises the question of what mechanisms are behind the relationship. Possibilities include: direct negative effects of employment such as occupational injuries or stress, changes in the opportunity cost of time associated with medical appointments or other time-intensive health promoting behaviors, changes in the consumption of goods that have negative health consequences, externalities associated with the business cycle, such as changes in pollution or traffic fatalities, and selective migration. At the same time, research linking individual job displacements to individuals own mortality finds that individuals who experience a job loss have higher probabilities of dying. These results would seem to be at odds with those based on state-level analyses, unless the increase in state level mortality rates that corresponds to improvements in the economy is mostly driven by factors external to changes in individuals own health behaviors.
The intellectual merit of this project is that it improves our understanding of the mechanisms that lead to pro-cyclical mortality. Particular emphasis is placed on disentangling effects that result from an individuals own behavior from changes that are related to externalities associated with economic fluctuations. This provides a key link to reconciling estimates produced by state-level and individual analyses. The broader impacts of the project lies in its implications for public policy: changes in the health of individuals that result from changes in their own behavior have different associated policy prescriptions than changes that result from external factors. In addition, the literature on the effects of job loss is rapidly expanding, and it is increasingly understood that the impact of job loss reaches much further than its impact on individuals own income. This project substantively advances the literature on job loss. A third broad impact of the project is that it adds to recent efforts to understand and measure the welfare costs of business cycle fluctuations. It investigates these mechanisms by 1) estimating detailed mortality-unemployment rate correlations by age and cause of death, 2) estimating the effect of own group vs aggregate unemployment on group mortality, and 3) looking at cyclical changes in the quality and quantity of health care. In addition, it investigates the possibility that non-random migration plays a role in the connection between mortality and the business cycle, either by inducing mis-measurement of population denominators, or by generating compositional changes in the health distribution of states. Because the preliminary analyses suggest that most of the pro-cyclical relationship is driven by deaths among the elderly, the project focuses on understanding the cyclical nature of health care choices among the elderly (for example choosing to live at home vs. choosing nursing home care).
