Economic Modelling of Suicide Under Income Uncertainty: For Better Understanding of Middle‐aged Suicide*

Abstract

This paper formalises an individual's decision about suicide within a framework of lifetime utility maximisation models. This is in line with the literature on economic modelling of suicide. The novelty of the paper is to take into account income uncertainty. Income uncertainty reduces a risk-averse individual's expected utility, making them more likely to commit suicide. On the other hand, income uncertainty creates a value to postponing suicide even when their income gets sufficiently low. This is because income uncertainty means that if things go well, they will get higher income in the future. Thus, income uncertainty has two opposite effects on suicidal behaviour. The main objective of this paper is to construct an economic model of suicide for investigating net impacts of income uncertainty on suicidal behaviour. For this purpose, it is assumed that the wage evolves according to a stochastic process. Then, the threshold wage, below which an individual commits suicide, is derived as a function of the parameters of the stochastic process assumed for the wage evolution. Impacts of changes in these parameters on the threshold wage are calculated. With the result, the paper shows how income uncertainty affects suicidal behaviour. I . I n t r o d u c t i o nSuicide is a major public health problem in Australia. While youth suicide tends to draw much attention, disaggregated data by gender and age reveal that suicide is not primarily an issue among young Australians. Figure 1 illustrates that male suicides consistently outnumbered female ones by a ratio of four to one. Figure 2 shows that males aged 25 to 34 and those aged 35 to 44 had the highest and the second highest age-specific suicide rates in 2004 among all age groups, respectively. More specifically, men aged 25 to 44 made up 36.9 per cent of the total deaths from suicide in 2004. As such, middle-aged males are at high risk of suicide in Australia. This paper bears the middle-aged male suicide in mind.What prompts middle-aged men to commit suicide? It is generally agreed that the unemployment rate among suicides is higher than for the population. The empirical work on economics of suicide also finds that male suicide rates are more responsive to changes in macroeconomic conditions than female ones in a variety of countries. These findings from aggregate data imply that economic difficulties are important elements for understanding middle-aged male suicides. As middleaged men traditionally see themselves as breadwinners in western countries, they may mentally

Suicide, unemployment and other socioeconomic factors: evidence from the economic crisis in Greece

“…They consider suicide as an action when a person chooses to put an end to his/her life when his/her expected usefulness fall, below his/her personal threshold of well-being. Based on such hypothesis, a high unemployment rate causing deterioration of living standards and decline of income is expected to increase the incidence of suicide in Greece 40 .…”

The Economics of Suicide in South Africa

“…Analyses of attempted suicide are, however, much less common than completed ones, due to lack of data on individuals and specifically suicide attempts. Suzuki (2008) expanded the Hamermesh and Soss (1974) model to account for income uncertainty. Since Hamermesh and Soss base their theory on the permanent income hypothesis, an individual's utility depends on the expected value of future lifetime income and does not depend on the standard deviation of future income that reflects income uncertainty.…”

“…Since Hamermesh and Soss base their theory on the permanent income hypothesis, an individual's utility depends on the expected value of future lifetime income and does not depend on the standard deviation of future income that reflects income uncertainty. In the absence of a risk neutral individual, utility is affected largely by uncertainty about future income rather than by discounted expected income during the individual's life span (Suzuki, 2008).…”

Socio‐economic Studies on Suicide: A Survey

“…Finally, Suzuki (2008) uses comparative statics to understand how different parameters of income distribution alter the wage threshold below which an individual commits suicide. In his model, the mean of future income negatively affects the threshold level.…”