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Is this recession good for your health?

25 Apr

There have been a good number of articles to document the phenomenon of a counter-cyclical relationship between unemployment and health. As unemployment rises, deaths from a number of causes have been found to decline. These include accidents, infant mortality, heart disease, and liver disease (Ruhm, 2000; Dehejia and Lleras-Muney, 2004). That such a relationship is observed may at first seem counterintuitive; the reduction in income must surely damage our health. But, there are a number of reasons why we may see this relationship:

  1. Opportunity cost of time: In economic upturns leisure time decreases and health improving behaviours such as exercise decrease. Thus, in an economic downturn, since our time is less precious we have more time to engage in time-intensive and health-promoting activities. We could even visit the doctor more.
  2. Health as an input to production: The production of goods and services requires healthy people. But this production may be hazardous or stress-inducing. Furthermore, some of the most hazardous sectors, such as construction, are the most affected by economic downturns.
  3. External sources of death: Less time spent commuting means less time on the road and so fewer vehicular accidents. We may also see less drink driving, which is more common in economic upturns.
  4. Income effect: Our consumption of alcohol and tobacco as well as other goods that damage our health may decline.

On the back of this evidence, I asked myself, has this effect been present in the UK during the current Great Recession? Overall, unemployment has risen over the last five years, and the average weekly wage has declined in real terms (thanks to @peterpannier for the graph):

Click for larger image

A proper analysis of the data would be a full paper, something that someone, somewhere, may be in the process of writing – but, for the purposes of a preliminary investigation, let’s just look at the raw data. The 2011 census asked people how they would rate their health and provided them with five possible responses from ‘very good’ through to ‘very bad’. The census also provides us with the number of economically active but unemployed individuals. All this information is aggregated at the level of lower super output area (LSOA); of which there are around 32,000 in the UK each with a population of around 1,500. The following figure shows a plot of the proportion of unemployed individuals (as a proportion of 16-74 year olds) against the proportion reporting ‘bad’ or ‘very bad’ health:

Click for larger image

Clearly, there is a strong upward trend; areas with more unemployed have more people reporting bad health. Does this contradict our initial hypothesis? One of the crucial points about the aforementioned arguments are that they are arguments to explain the relationship between a change in health and a change in economic circumstances. The papers cited above used a fixed effects analysis; an analysis to examine the effects of changes. Thus, the correlations in the figure above may be picking up structural unemployment: we may be seeing the relationship between health and unemployment for those for whom the recession doesn’t affect health behaviour because they don’t experience a change as they are already unemployed. So let’s look instead at the relationship between short-term unemployment and the proportion reporting ‘bad’ or ‘very bad’ health. I defined short term unemployed here as having last been employed in 2011, i.e. a maximum of three months prior to the census. I looked at this in two ways; firstly, by looking at the number of short term unemployed as a proportion of the total number of people between 16 and 74:

Click for larger image

As you can see, there is now a downward trend, albeit not very steep. One issue is that areas with high short-term unemployment may also have high long-term unemployment making it hard to distinguish their effects. Therefore, my second approach was to look at the proportion of short term unemployed as a proportion of the total unemployed:

Click for larger image

Now there is clearly a strong downward trend. At a superficial level, these data seem to preliminarily support the hypothesis that short-term changes to unemployment may improve health. However, we also see that long-term unemployment is related to negative health. This is certainly not unexpected.

It is well evidenced that longer spells of unemployment lead to a reduced probability of finding work. From the macroeconomic point of view, the longer a downturn in the economy lasts, the greater the structural unemployment. This, as the above data suggest, may therefore lead to a reduction in average population health. Reducing unemployment and the duration of employment spells is certainly important but an ambitious policy goal. A better understanding of how socioeconomic deprivation and poor health are related would identify other methods to combat this negative effect on health.

These data may also shine a different light on Keynes’s well quoted line that ‘In the long run we are all dead’.

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3 responses to “Is this recession good for your health?

  1. Chris Sampson

    April 25, 2013 at 10:24 am

    Nice post, Sam.
    It seems possible that, if you lose your job, your worries will be distributed away from health (a la Bradford and Dolan, 2010). You’ll probably be more concerned with paying your mortgage than treating your minor ailments.
    It’d be interesting to compare the impact of the recession on both objective and subjective measures of health. Your analysis suggests that the effect may hold for the latter as well as the former. The real test would be whether it held for more objective measures of overall health (EQ-5D?), rather than specific health problems.

     
  2. Chris Sampson

    April 25, 2013 at 10:31 am

    …It’d also be interesting to know what the impact of austerity has been on people’s health – controlling for the effects of the recession. Could austerity limit the beneficial health effects of the recession by cutting services that primarily benefit the least well-off (in terms of income and health)? I’ll leave it to you to figure that one out.

     
  3. Sam Watson

    April 25, 2013 at 10:37 am

    I think the main point is that there are different effects in the short-term and long-term. A short spell of unemployment or reduced income may lead you to change you behaviour with the expectation that your income will bounce back, you may also have access to credit or savings and be able to do some consumption smoothing. But, in the long term we start to see the effects of socioeconomic deprivation. I think that austerity since it will reduce people’s income and people’s expectations of future income and probably their access to credit will create a long term effect rather than a short term one.

     

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