Recessions May Be Surprisingly Good for Your Health

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Narrator: If you’re under financial stress and worried about your future, your health will likely take a hit. On a national level, if a recession led to rising poverty, unemployment, and bankruptcies, you might expect health and mortality rates to worsen as well. But the data indicate just the opposite.

Matthew Notowidigdo: We were aware of this previous work studying the effect of recessions on health outcomes, and it had this pretty surprising and counterintuitive result that recessions looked like they were good for your health. When the unemployment rate was high, mortality rates were actually low, and the way we started thinking about the project is we wanted to know: Is that still true for the most recent recessions? And was it still true during the biggest recession in my lifetime, the Great Recession? We analyze and reconsider this kind of classic question in health economics. Again, just trying to replicate: Were these past findings still true today?

Narrator: That’s Chicago Booth’s Matthew Notowidigdo. He and his coauthors analyzed health and economic data from across the US from 2003 to 2016. The data accounted for recessionary effects, such as household consumption, workforce participation, and joblessness. The researchers then factored in death counts from the Centers for Disease Control and Prevention, population data from the National Cancer Institute, and a sampling of Medicare enrollees.

Matthew Notowidigdo: And I think a bit to our surprise, we found very similar estimates to the past literature. So even today, even in the Great Recession, it still looks like recessions are good for our health on average. In the places in the United States that were harder hit by the Great Recession, those areas experienced bigger declines in mortality rates. And so perhaps a more intuitive way to think about that magnitude is to translate those declines in mortality rates into changes in life expectancy. And there, what we find is that the increased life expectancy is primarily concentrated among older individuals. So think about the elderly and near elderly at the time of the Great Recession. They experienced increases of life . . . increased life expectancy as a result of the reduction in mortality rates that are occurring during the Great Recession. What we do in the paper is we quantify the change in life expectancy that comes from the reductions in mortality rates caused by the Great Recession, and one way we like to think about that magnitude is to translate it into a change in life expectancy across the age distribution.

Narrator: For example, the researchers find that in the Great Recession, 4 percent of all 55-year-old Americans gained a year of life expectancy. The biggest gains were among those aged 25 and older who had no more than a high-school education.

Matthew Notowidigdo: I think that’s an interesting finding because there’s a lot of work in labor economics and macroeconomics suggesting that that same group—individuals with lower levels of education—actually experience more severe economic consequences. They’re more likely to be laid off. They’re more likely to experience declines in income. And despite that, this is the same group that’s also experiencing the bulk of the mortality benefit.

Narrator: When the researchers broke down the mortality-rate reductions by cause of death, they find that one of the largest reductions in deaths came from fewer motor-vehicle crashes. The researchers surmise that this could reflect fewer people commuting to work.

Matthew Notowidigdo: We also see reductions in mortality from cardiovascular disease, respiratory diseases, and liver disease, and also I think, interestingly, we see very little effect on cancer mortality. And I think that’s quite intuitive because you could imagine a recession might, in various ways, reduce the chance that people get a heart attack, or reduce the chance they get respiratory illnesses. But it seemed unlikely that a recession would affect the incidence of cancer. And so, in a way, we kind of see that as a sanity check on the results, that the kinds of causes of death that we might think would be responsive to economic conditions are, in fact, the ones that we’re estimating are affected by the Great Recession.

Narrator: The researchers also find a reduction in deaths from illnesses linked to air pollution. When a recession hits, economic activity falls, which reduces the volume of toxic emissions into the atmosphere.

Matthew Notowidigdo: For people that are already in poor health, air pollution can have a big impact on mortality rates. And so putting those two pieces together, the causal chain we have in mind is: the recession leads to reductions in air pollution, and the reduction in air pollution then can explain some of the mortality benefits that we’re estimating.

Narrator: The researchers find that for every 1 percent increase in unemployment, there is a 1.3 percent decrease in fine particulate pollution relative to the national average, suggesting benefits for air quality and health.

Matthew Notowidigdo: Recessions are still bad. I wanna be clear. I wanna make sure there’s no misunderstanding there. Recessions are bad. They lead to big reductions in income and consumption. But I think what our paper shows is that they’re not quite as bad as we thought because of this countervailing health benefit. And so I think our study really adds to the body of evidence that’s accumulating in environmental economics that air pollution is just a lot worse for health, than I think a lot of people appreciate. There’s a lot of different pieces of evidence that are accumulating that indicate that even exposure to air pollution for a short period of time can affect mortality rates for people in poor health. And so, ideally, if we could come up with ways of reducing air pollution without having a recession, again, I think that’s obviously just the best of all possible worlds.