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Recessions bring mostly bad news—escalating unemployment, shrinking wages, falling markets, rising poverty, and surging bankruptcies. But they might be better for your health than economic growth, according to MIT’s Amy Finkelstein, Chicago Booth’s Matthew Notowidigdo, MIT’s Frank Schilbach, and McMaster University of Canada’s Jonathan Zhang.
Analyzing an array of health and economic data from before, during, and after the Great Recession, the researchers find that mortality rates in the United States fell significantly and held at lower levels for several years, coming partly from reduced air pollution. This raises the counterintuitive idea that recessions could actually have welfare benefits for some people, particularly older people who are no longer in the labor market.
The findings were a surprise—50 percent of health economists and labor-studies experts affiliated with the National Bureau of Economic Research told the researchers in a survey that they thought the Great Recession would have led to an increase in mortality. (So did ChatGPT, which the researchers also queried.) Incorporating the findings into economists’ recession calculus will substantially reduce estimates of the welfare costs of downturns, Finkelstein, Notowidigdo, Schilbach, and Zhang suggest.
Their data covered all 50 US states and the District of Columbia from 2003 to 2016, and their analysis accounted for varied recessionary effects across geographical locations at the state and county levels, including joblessness, workforce participation, and household consumption.
The data included death counts from the Centers for Disease Control and Prevention, population data from the National Cancer Institute, and a sampling of Medicare enrollees aged 65–99. They collected information on dates and causes of deaths, counties of residence, and demographics such as race, ethnicity, sex, and education levels. The researchers also observed doctor and emergency-room visits, hospitalizations, and nursing-home stays as well as indicators for 20 chronic conditions including lung cancer, diabetes, and depression.
The findings indicate that for every 1 percentage point increase in unemployment in a county’s commuting zone—the geographic areas where people live and work—the age-adjusted mortality rate dropped by 0.5 percent. Because the average commuting zone experienced a 4.6 percentage point increase in unemployment between 2007 and 2009, local areas’ annual mortality rate dropped by 2.3 percent.
This economic downturn reduced mortality rates
The decline rate applied to all groups, across gender, race, ethnicity, and age—with one exception: education level, the data shows. The declines were larger for those older than 25 with no more than a high-school education.
While there were similar percentage reductions in mortality across all age groups, the death rate for older people is always highest. Consequently, the decline in deaths among people aged 65 and older accounted for three-quarters of the total reduction.
“These estimates imply that the Great Recession provided one in twenty 55-year-olds with an extra year of life,” the researchers write.
What accounts for this recessionary decline in deaths? Finkelstein, Notowidigdo, Schilbach, and Zhang didn’t find that improved health behaviors, reduced spread of infectious disease, or better quality of nursing-home care amid tighter labor conditions had a meaningful effect. However, declines in air pollution, as recorded by the Environmental Protection Agency, may have accounted for 40 percent of the decrease, the researchers calculate.
During a recession, there tends to be less pollution from industrial activity, electricity generation, and transportation. Counties hardest hit by the recession experienced the greatest declines in pollution. The researchers find that the same 1 percentage point increase in the local unemployment rate led to a 1.3 percent decline in fine particulate pollution relative to the national average.
Higher pollution levels are often associated with cardiovascular and respiratory diseases. The researchers find that the single largest cause of death—cardiovascular disease—accounted for about two-fifths of the declines in mortality.
They suggest that higher pollution levels may also affect mental health and increased rates of suicide. According to their data, the suicide rate declined slightly during the recession and fell faster between 2010 and 2016. All so-called deaths of despair—from suicide, liver disease, and drug overdoses—declined as well.
The most direct implication of the study, Notowidigdo says, is that “pollution is probably underregulated, because the mortality benefits from lower pollution induced by recessions appear to be pretty significant.” Ideally, he says, we’d design policies to achieve the same pollution reductions without a recession, so that we can experience the “best of both worlds in terms of the economy and population health.”
Amy Finkelstein, Matthew Notowidigdo, Frank Schilbach, and Jonathan Zhang, “Lives vs. Livelihoods: The Impact of the Great Recession on Mortality and Welfare,” Working paper, July 2023.
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