Why are recessions good for your health?

Abstract

A series of influential papers by Christopher J. Ruhm (2000, 2003, 2005, 2008) documents that recessions are “good for your health”—or, more specifically, that state-level mortality rates are strongly procyclical. The magnitude of the correlation is economically meaningful: a typical estimate from the literature suggests that a 1 percentage point increase in a state’s unemployment rate is associated with a 0.54 percent reduction in that state’s mortality rates. If this reflects a causal relationship that is also valid at the national level, then a 1 percentage point increase in the unemployment rate would translate (based on 2004 mortality rates) into about 12,000 fewer deaths per year. These findings are frequently interpreted as resulting from the rising opportunity cost of time that accompanies better labor market opportunities, and some empirical support exists for this interpretation. For example, Ruhm (2000) shows that obesity and smoking also exhibit a procyclical pattern, The economy and healTh †