Why the population is healthier as joblessness rises

Jun 03, 2013

By Peter Orszag


THIS is a morbid column about some unexpected and encouraging news: Deep economic declines, such as the one experienced in the United States a few years ago, probably lengthen life expectancy. This is exactly the opposite of what most people believe.

A reasonable estimate is that for every percentage point increase in the unemployment rate, the US mortality rate drops by 0.3 percentage point. In other words, and although it runs counter to our intuition, recessions may be bad for our wallets but good for our health.



Part of the reason is that there are fewer traffic fatalities. This makes sense because there's typically less traffic when the economy slows down. From 2002 to 2007, the number of Americans dying in motor vehicle accidents was roughly constant, at about 42,000 or so per year. By 2011, that figure had dropped by almost a quarter, to 32,367 - the lowest since 1949, when the US population was half what it is now.

Still, automobile accidents account for less than 2 per cent of deaths each year, so the drop in fatalities accounts for only a tiny part of why life expectancy improves during recessions.

The rest of the story may be explained by evidence found in three recent studies. One of these was about Iceland, which experienced a severe recession after its banking crisis in October 2008. During the bust, Icelanders abandoned various unhealthy behaviours, according to surveys conducted by the University of Iceland, Rider University and Robert Wood Johnson Medical School in New Jersey in 2007 and 2009.

Among working-age people, for example, the share who smoked fell to 19 per cent, from 23 per cent before the crisis. The proportion who consumed at least five alcoholic drinks in a day at least once a month declined to 17 per cent, from 20 per cent. The share eating fast food weekly fell to 25 per cent in 2009, from 32 per cent in 2007, and the figure for those practising indoor tanning declined to 13 per cent from 17 per cent. Meanwhile, the proportion of people getting adequate sleep rose to 76 per cent, from 72 per cent. The effects of these shifts apparently outweighed any negative effects of the crisis, for example, the rising share of Icelanders suffering from anxiety or poor mental health.

A second study focused on air pollution, specifically carbon monoxide, particulate matter and ozone. Higher concentrations of carbon monoxide are connected with higher mortality rates, economists Garth Heutel of the University of North Carolina at Greensboro and Christopher Ruhm of the University of Virginia found. A one-standard-deviation increase in carbon monoxide raises the mortality rate by 2 per cent, they observed. As one would expect, this effect seems to be concentrated in deaths from respiratory and cardiovascular diseases.

The two economists demonstrate that about one-third of the effect of high unemployment on mortality can be attributed to less pollution: When the economy is in a recession, concentrations of carbon monoxide are lower, and this improvement in air quality benefits people's health.

The third study found that deaths among the elderly decline disproportionately during a recession, and that the quality of nursing home staff may be an important reason. Staffing ratios in American nursing homes tend to be higher when the overall labour market weakens, because more people are willing to work in the facilities, this study found.

Taken together, the evidence suggests that a combination of forces contributes to the increase in American life expectancy during times of higher unemployment: Motor vehicle deaths decline, people tend to avoid unhealthy behaviour, air pollution is diminished, and nursing home staffing improves.

None of which should make us wish for economic trouble. Higher unemployment means loss of productivity, lower income and mental anguish, and those are more than sufficient reasons to combat joblessness. There may be some small consolation, though, in learning that it probably doesn't harm human health the way that we all imagined.

BLOOMBERG

The writer is chairman of the financial strategy and solutions group at Citigroup Inc and a former Obama administration official.