Tuesday, March 04, 2008

Wanna Feel Better About The Recession?


Now here’s good news. Recessions save lives.
At least that what Thomas D. Higgins says in a report.


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“According to a recent study by the University of North Carolina, Americans have tended to get healthier as the economy gets worse. In fact, a temporary one percentage point increase in the unemployment rate has historically been associated with a 0.5% decline in the mortality rate or about 14,000 fewer deaths per year. People are much less likely to have car accidents and catch communicable diseases. And with more free time on their hands, people tend to exercise more, consume less tobacco, and prepare healthier meals and lose weight.” -Thomas D. Higgins, the chief economist of Payden & Rygel Investment Management in Los Angeles

---- Abstract -----
Panel data econometric methods are used to investigate how the risk of death from acute myocardial infarction (AMI) varies with macroeconomic conditions after controlling for demographic factors, fixed state characteristics, general time effects and state-specific time trends. The sample includes residents of the 20 largest states over the 1979 to 1998 period. A one percentage point reduction in unemployment is predicted to raise AMI mortality by 1.3 percent, with a larger increase in relative risk for 20-44 year olds than older adults, particularly if the economic upturn is sustained. Nevertheless, the much higher absolute AMI fatality rate of senior citizens implies that they account for most of the additional deaths. This suggests the importance of factors like air pollution and traffic congestion that increase with economic activity, are linked to coronary heart disease and may have particularly strong effects on vulnerable segments of the population, such as the frail elderly. AMI mortality risk quickly rises when the economy strengthens and increases further if the favorable economic conditions persist. This is consistent with strong effects of other short-term factors on heart attack risk and with health being a durable capital stock that is affected by flows of lifestyle behaviors and environmental conditions whose effects accumulate over time.
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Sustained growth in income generally has been associated with improvements in health, but all growth may not be equally healthy. In A Healthy Economy Can Break Your Heart, author Christopher Ruhm shows that transitory upturns, those involving more intensive use of existing labor and changes in environmental conditions, may be associated with increased mortality from heart attacks.
To investigate this relationship, Ruhm uses a variety of measures from each of the twenty largest states, measured each year from 1970 to 1998. He calculates heart attack mortality rates using data from the Centers for Disease Control, using the number of deaths from heart attack in a state for a particular year divided by the estimated state population during that year. The rates are calculated for males, females, whites, blacks, and three age groups: 20-44, 45-64, and over 64. The annual state unemployment rate serves as a proxy for economic conditions. And, the estimates are adjusted for the fraction of state residents who are female, black, under 25 years of age, over 64, who never attended college, and who were college graduates.
In general, the results suggest that a single percentage point reduction in unemployment increases predicted deaths from heart attack by about 1.3 percent. The percentage increase in fatalities is similar for males and females, and smaller for blacks than whites. For the same reduction in unemployment, the estimate of an increase of 2.37 percent for 20-44 year olds is considerably larger than the 0.92 percent increase estimated for those 45-64, or the 1.41 percent increase estimated for those 65 and over. Although the increase in risk is largest for the 20-44 year old group, the majority of additional heart attacks are predicted to involve those over 64. Equally split between men and women, 2,220 out of the total of 2,525 additional heart attacks associated with a single percentage point drop in unemployment will affect those over 64.
Ruhm considers several reasons why heart attack deaths might rise as unemployment falls. Longer working hours could make it more difficult for individuals to take the time to exercise or eat properly. Inadequate sleep is associated with a variety of health risks, and extra hours could reduce sleep. Job stress may rise during economic expansions and may be exacerbated by production speedups and inexperienced workers. These factors would affect people of prime working age and may account for the large increase in risk observed for the 20-44 year old age group. The high number of absolute heart attacks observed among the elderly may come about as economic growth increases air pollution and traffic congestion, both of which have been associated with higher rates of heart attack.
Ruhm cautions however that, "these results obviously do not justify contractionary economic policies." Instead, they suggest that the effects of growth are not uniformly beneficial, and that "clinicians may need to make efforts to identify patients at higher risk" when the economy strengthens.
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