Recessions kill (some)
The coming recession will kill hundreds of Americans. That’s the implication of this new paper by Samad Sarferaz and Wolfgang Reichmuth which shows that mortality rates for 20-30 year old American men tend to rise when unemployment rises.
This seems to contradict the work of Christopher Ruhm and Eric Neumayer (pdf) who have estimated that recessions lead to lower death rates.
But only seems. In one important sense, Sarferaz and Reichmuth corroborate these findings, by showing that recessions do reduce deaths among older workers.
There’s an obvious possible explanation for this difference. Older workers might benefit from recession because it prompts them to downshift, or just reduces their workload, thus reducing their exposure to stress-related illnesses such as heart disease. But younger people aren’t especially vulnerable to these in the first place, and so don’t gain. Instead, unemployment - which usually is more cyclical among younger workers than older ones - tempts some of them into risky behaviours such as drug-taking or gang membership.
This poses an awkward ethical problem for macroeconomic stabilization policy. Such policies, if successful, save the lives of younger people but jeopardize those of older ones. And the absence of such policies has the opposite effect.
This seems to contradict the work of Christopher Ruhm and Eric Neumayer (pdf) who have estimated that recessions lead to lower death rates.
But only seems. In one important sense, Sarferaz and Reichmuth corroborate these findings, by showing that recessions do reduce deaths among older workers.
There’s an obvious possible explanation for this difference. Older workers might benefit from recession because it prompts them to downshift, or just reduces their workload, thus reducing their exposure to stress-related illnesses such as heart disease. But younger people aren’t especially vulnerable to these in the first place, and so don’t gain. Instead, unemployment - which usually is more cyclical among younger workers than older ones - tempts some of them into risky behaviours such as drug-taking or gang membership.
This poses an awkward ethical problem for macroeconomic stabilization policy. Such policies, if successful, save the lives of younger people but jeopardize those of older ones. And the absence of such policies has the opposite effect.
"This seems to contradict the work of Christopher Ruhm and Eric Neumayer (pdf) who have estimated that recessions lead to lower death rates."
And I had thought that the death rate remains the same — namely 100% — whatever the sate of the economy.
Posted by: Mark Brinkley | October 01, 2008 at 12:43 PM
The coming recession will kill hundreds of Americans.
Quick! Find out whodunnit and charge them with genocide!
Posted by: Neil | October 01, 2008 at 02:20 PM
In recessions, labour demand reduces and recruitment is lowered - this particularly affects entrants to the labour market - i.e. young people - who find there isn't enough jobs to go around. So this is another partial explanation why recessions particularly affect young people.
In UK recession in early 1990s - downturn affected youth and graduate unemployment.
Posted by: Glenn | October 02, 2008 at 10:57 AM
Just as interesting are the entrepreneurs it births.
Posted by: Doug Barger | October 02, 2008 at 11:55 AM
Politicians are principally to blame for where we are and the impending financial collapse of the World Economy
For why is it that governments around the world did nothing until financial death was knocking on the door?
For they were told at least five years ago about the dire state of the international financial markets. In this respect clear examples of this knowledge that they had at the time were,
1. In 2003 the former US Federal Reserve chairman Alan Greenspan warned of the forthcoming financial collapse if Fannie Mae's activities were not reined in. The government did nothing and Fannie Mae was allowed to continue operating until only last month, some five-years after the warning from the US’s top banker was given. Indeed, the 30% of mortgages in the US, which are toxic mortgages, equates to losses for the banks of $3.1 trillion. Therefore how could politicians overlook such a failure it has to be asked? The only answer can be incompetence and complacency at the highest level.
2. In 2006 the Bank for International Settlements, the world's most prestigious financial body and the central banker’s ultimate bank, stated that the financial world was in a diabolical state and that it had to change its current ways and activities. No government throughout the world intervened until it is was too late and where caution was not on the agenda for them just a mere two years ago.
Clearly therefore it is the politicians who are to blame for all the mess that we all now find ourselves and due to them not taking any action years ago. Indeed, the dire problems that we are now starting to witness are a direct result of their total complacency for years and where eventually it will cause the worst financial crash that we have ever witnessed. For this is already transferring into the economy and where the wheels of industry are now steadily but surely starting to slow to a full stop.
It is not only the bankers therefore who need sorting out but their bed pals the politicians as well. For both have made enormous financial benefit out of this unprecedented, irresponsible and appalling personal greed.
Dr David Hill
World Innovation Foundation Charity (WIFC)
Bern, Switzerland
Posted by: dr david hill | October 02, 2008 at 12:46 PM
Politicians are principally to blame for where we are and the impending financial collapse of the World Economy
For why is it that governments around the world did nothing until financial death was knocking on the door?
For they were told at least five years ago about the dire state of the international financial markets. In this respect clear examples of this knowledge that they had at the time were,
1. In 2003 the former US Federal Reserve chairman Alan Greenspan warned of the forthcoming financial collapse if Fannie Mae's activities were not reined in. The government did nothing and Fannie Mae was allowed to continue operating until only last month, some five-years after the warning from the US’s top banker was given. Indeed, the 30% of mortgages in the US, which are toxic mortgages, equates to losses for the banks of $3.1 trillion. Therefore how could politicians overlook such a failure it has to be asked? The only answer can be incompetence and complacency at the highest level.
2. In 2006 the Bank for International Settlements, the world's most prestigious financial body and the central banker’s ultimate bank, stated that the financial world was in a diabolical state and that it had to change its current ways and activities. No government throughout the world intervened until it is was too late and where caution was not on the agenda for them just a mere two years ago.
Clearly therefore it is the politicians who are to blame for all the mess that we all now find ourselves and due to them not taking any action years ago. Indeed, the dire problems that we are now starting to witness are a direct result of their total complacency for years and where eventually it will cause the worst financial crash that we have ever witnessed. For this is already transferring into the economy and where the wheels of industry are now steadily but surely starting to slow to a full stop.
It is not only the bankers therefore who need sorting out but their bed pals the politicians as well. For both have made enormous financial benefit out of this unprecedented, irresponsible and appalling personal greed.
Dr David Hill
World Innovation Foundation Charity (WIFC)
Bern, Switzerland
Posted by: dr david hill | October 02, 2008 at 12:47 PM
"For why is it that governments around the world did nothing until financial death was knocking on the door?"
Laissez faire
Posted by: Neil | October 02, 2008 at 12:59 PM