This is the title of this article in St. Louis Fed publication – The regional economist. At first look it looks how can it be? How can recessions lead to better health? After all you might lose your job, if you manage to keep your job pay hikes are ruled out etc.
As per Rubén Hernández-Murillo and Christopher J. Martinek, recessions end up being good for health as people now have more time to take care of their health. So as long as recessions are not long, it could actually be beneficial to certain people:
Conventional wisdom suggests that health improves during good economic times and worsens during tough economic times. When the economy is in recession, stress arising from negative economic outcomes—such as potential job loss, stagnating wages and falling home values—can lead to harmful health outcomes. Similarly, health can be expected to improve when incomes rise and social and psychological hardships diminish. Despite this intuition, recent economic studies suggest the opposite—a recession, as long as it’s not too deep or too long, may be good for your health.
Economist Christopher J. Ruhm analyzed the relationship between unemployment and mortality rates in the United States over the past few decades. His research shows that when unemployment rates increase, total mortality rates decrease. The effect is economically significant: An increase of one percentage point in the unemployment rate reduces annual fatalities by about 11,000. Why does mortality fall? Ruhm argues that the main reason is that individuals opt for healthier lifestyles during temporary downturns because the cost of leisure time decreases. For example, individuals have more time to prepare healthier meals at home, to engage in physical activity and to visit the doctor. Alcohol and tobacco use is reduced, too, because individuals reduce discretionary spending in periods of unemployment.
On the flip side, fatalities during expansions can increase because of not only lifestyle changes but factors outside of individual behavior. In particular, Ruhm argues that work-related accidents are more likely to occur during periods of expansion, as individuals work longer hours, and that more-hazardous conditions, such as increased stress, may be more prevalent. Finally, motor vehicle accidents may also be more common during an economic upturn because improved economic conditions may lead to more traffic on highways and to higher alcohol consumption.
Wow!! Did not know of this line of reasoning. The authors then work on Ruhm’s idea and find lower morality is not because of lifestyle changes but because of fewer accidents taking place in recession.
Plus, you find similar negative relationship between recession and health in other countries as well:
In any case, the strong negative correlation between unemployment and the mortality rate is not in dispute. This phenomenon is not unique to the United States. A similar association has been found in Spain, Germany and other developed countries.
Though again, this is only in case of recessions which are short. A long recession like 2007-09 will not show the same relation. May be 2001 recession does show this relationship.
Recent research shows that people’s medicine usage actually declined in this crisis:
In contrast to Ruhm’s predictions about increasing routine visits to the doctor because of time availability during recessions, another line of research suggests that during the recent economic crisis the effect from the reduced value of time may have been offset by the severe decline in wealth that was observed around the world. Economists Annamaria Lusardi, Daniel Schneider and Peter Tufano document a reduction in individuals’ use of routine medical care during the recent crisis in a group of five developed countries: the United States, Great Britain, Canada, France and Germany. They found that the declines were proportional to the out-of-pocket costs that individuals had to bear.Lusardi, Schneider and Tufano found that the ranking of countries in terms of privately borne costs for routine care matched the ranking of observed reductions in the use of care. These observations suggest that tighter financial constraints during the recent crisis were the main factor behind the decline in use of medical care.
Well…economists never cease to surprise with their appetite for research.