Are recessions good or bad for your health?

  • Date

    Tue 22 Aug 17

On the one hand, recessions can lead to job loss, which can mean stress, depression, and substance abuse. On the other hand, they can lead to more free time for exercise, fewer commuting-related traffic fatalities, and less money spent on alcohol and cigarettes.

Dr Vellore Arthi, from our Department of Economics, and her co-authors Brian Beach, College of William and Mary, and Walker Hanlon, New York University, explored the methods used to answer this question. Their findings have now been published in The Wall Street Journal.

Migration in response to downturns in the business cycle – recessions, or upturns in the business cycle – booms, can complicate this question further, by changing the size and composition of the population at risk of ill health.

Their research uses data from a historical economic downturn and a modern economic boom to show that migration flows in response to the business-cycle fluctuations of recessions and booms can be large. These often short-term population movements can be difficult to track using traditional population data, which is normally reported only once in ten years.

They identify that research methods that fail to take short-term population movements into account can lead to very different results than those that do. For instance, in their historical downturn, they find that migration-unadjusted methods would lead researchers to believe that the recession reduces death rates, while migration-adjusted methods show that recession increases death rates.

Dr Kate Rockett, Head of Department said: “The most recent great recession has emphasised the importance of understanding how business cycles affect welfare. Health consequences can be large and need to be measured accurately for governments to properly prioritise programmes that reduce these and other negative effects of business cycles. This research underlines that our existing methodology is open to question, so that we should not be hasty in drawing conclusions about the health-recession link.”