The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality

Abstract

It is well known that mortality rates are pro-cyclical. In this paper, we attempt to understand why. We find little evidence that cyclical changes in individuals' own employment-related behavior drives the relationship; own-group employment rates are not systematically related to own-group mortality. Further, most additional deaths that occur when the economy is strong are among the elderly, particularly elderly women and those residing in nursing homes. We also demonstrate that staffing in nursing homes moves counter-cyclically. These findings suggest that cyclical fluctuations in the quality of health care may be a critical contributor to cyclical movements in mortality.Why do death rates rise when the unemployment rate falls? Pro-cyclical mortality rates in the United States (and elsewhere) are well-documented, but the causes of this association remain poorly understood. The most frequently cited explanation is that the business cycle affects individuals' time use, stress levels, and related health investments through its effects on hours of work. In this paper, we show that pro-cyclical mortality in the United States is not driven by changes in individuals' own time use associated with their own employment changes. Instead, we find evidence that alternative mechanisms are at work, including cyclical variation in the quality of health care.The negative relationship between the unemployment rate and the mortality rate has been documented in a series of influential papers by Christopher Ruhm (2000, 2003, 2005a, 2005b, 2007). A typical estimate suggests that a one-percentage point increase in a state's unemployment rate leads to a 0.54 percent reduction in that state's mortality rate (Ruhm, 2000). When applied to U.S. mortality counts from 2006, this implies that a one percentage point increase in unemployment would lead to about 13,000 fewer annual deaths. Ruhm's findings are widely cited in the health economics literature and have been echoed in work by HHS Public Access

Unemployment and mortality: Evidence from the PSID

“…Notably, Miller, Page, Huff-Stevens, and Filipski (2009) show that this relationship holds for the very old and the very young suggesting that the mechanism for the result has to be something that is unrelated to job loss. More recent work by Huff-Stevens, Miller, Page, and Filipski (2011) suggests that these results are the consequences of increases in vehicular accidents and decreases in the quality of medical care for the elderly during boom times.…”

“…However, as it turns out, studies based on aggregate data actually suggest the opposite, namely, that worsened macroeconomic conditions are associated with lower mortality e.g. Ruhm (2000), Filipski (2009), andFilipski (2011). At first glance, there does appear to be a tension between these two literatures.…”

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“…A concern which would invalidate this instrument as noted by Stevens et al (2015) is that local mortality rates are found to be associated with a community's cyclical fluctuations in economic activity resulting from cyclical variations in the local quality of care services. In China, this is less of a concern.…”

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“…There is a rich body of evidence on the potential pathways through which economic shocks could affect health outcomes Marmot 2002;Bezruchka, 2009;Miller et al, 2009;Stevens et al, 2011). There are theories to suggest that worsening economic conditions can have deleterious impacts on health outcomes but, equally, there are many hypotheses that predict the opposite.…”

“…Stevens et al (2011) looked at the role of health care supply to help explain the aforementioned empirical conundrum whereby mortality rates decline when unemployment goes up. They investigated whether the fall in mortality rates in nursing homes can be explained by supply side factors.…”