Titus K.

Chirchir

Health Economics and Policy

04/23/2013

How Long are Recessions Good for our Health? Robyn McKnight 95 et al.

Recessions are good for your health. Christopher J. Ruhm reached this interesting, yet provocative and unexpected conclusion in his paper Are Recessions Good for Your Health (2000) [1]. He estimated that a 1-percentage point increase in a states unemployment rate could be associated with a 0.54 percent reduction in the states mortality rates. This can be interpreted as a consequence of the increased opportunity cost of time that accompanies a robust labor market and a cutback in spending on adverse health behaviors. Robin McKnight et al. [2] followed up on this finding studying the long-term impact of a recession on the health, and ultimately, the longevity of people between the ages of 55 and 65. They show that the longevity increase resulting from a recession is short-lived. Their research allows us to determine post-recession effect on the security of older Americans survival rates, and serves to emphasize the importance of insurance, Social Security and Medicare in improving the wellbeing, and long-term health outcomes of the elderly, especially during tough economic times. Correlations between mortality and insurance, unemployment and uninsurance, Social Security & Medicare and health are crucial topics in health economics and social policy that this research reports on. According to their findings, the benefits of SS and Medicare programs provides a safety net to both the currently retired and to current workers approaching retirement age. She hypothesizes that following an economic downturn, job loss could mean years of unemployment especially for those in their late 50s and early 60s. The lingering impacts of losing a job and the lack access to affordable health care made available by employer provided insurance contribute to deteriorating health and lower survival rates. Social Security, and Medicare cushions those above 62 for those over 65. Those below 55 have an easier time finding new jobs in the market after a recession and are not so adversely affected by the downturn. McKnight and her colleagues used mortality data between 1969 and 2008 to generate age-specific cohort survival probabilities at older ages (between the ages 55 and 65), and tracked them through the age of 79. They then proceeded to compare the results from the different cohorts to test their hypothesis. This required them to calculate survival probabilities of up to 25 years per cohort using mortality data for all those years. This is a laborious process posing lots of challenges and time strains. Also, the social nature and the moral implications of this experiment approach in data acquisition limits the design of a control experiment. It is also challenging to track the subjects migration over the time of the experiment. Their findings indicated that for workers aged between 57 and 61, any positive health effects incident to a recession are temporary and are more than offset by subsequent health deterioration. Job loss at the age of 58 as a result of a recession is solely responsible for a decline in life expectancy by three years! People outside this age bracket were not significantly affected by the recession. The people who were further from retirement had a better chance of getting their jobs back, and those aged 62 and over and lost their jobs were unaffected, partly because of the safety net

Titus K. Chirchir

Health Economics and Policy

04/23/2013

provided by Social Security and Medicare. Thus, early entitlement to Social Security and Medicare can serve to temper a recessions negative effects on ones health. References [1] Ruhm Christopher, J. 2012. Are recessions good for your health? Q J Econ 2000;115:61750. [2] Coile, Courtney C., Phillip B. Levine, and Robin McKnight. 2012. Recessions, Older Workers, and Longevity: How Long Are Recessions Good For Your Health? Cambridge, MA: NBER working paper 18361, September. [3] Talk by Robin McKnight at Amherst College on Sat, April 6th 2013.