Are Economic Booms Bad for Your Health?

When I was in graduate school, I was taught that economics is the study of incentives and their intended and unintended consequences. Today, economics is morphing into the empirical field where we challenge the "conventional wisdom".

This paper http://www.nber.org/papers/w12102 offers some novel freakonomics.

A Healthy Economy Can Break Your Heart

Christopher J. Ruhm

NBER Working Paper No. 12102
Issued in March 2006
NBER Program(s): HC

---- Abstract -----

Panel data econometric methods are used to investigate how the risk of death from acute myocardial infarction (AMI) varies with macroeconomic conditions after controlling for demographic factors, fixed state characteristics, general time effects and state-specific time trends. The sample includes residents of the 20 largest states over the 1979 to 1998 period. A one percentage point reduction in unemployment is predicted to raise AMI mortality by 1.3 percent, with a larger increase in relative risk for 20-44 year olds than older adults, particularly if the economic upturn is sustained. Nevertheless, the much higher absolute AMI fatality rate of senior citizens implies that they account for most of the additional deaths. This suggests the importance of factors like air pollution and traffic congestion that increase with economic activity, are linked to coronary heart disease and may have particularly strong effects on vulnerable segments of the population, such as the frail elderly. AMI mortality risk quickly rises when the economy strengthens and increases further if the favorable economic conditions persist. This is consistent with strong effects of other short-term factors on heart attack risk and with health being a durable capital stock that is affected by flows of lifestyle behaviors and environmental conditions whose effects accumulate over time.


What could be the causal mechanism here? One plausible environmental story relates to electric utilities. During boom times, high emitting low productivity electric utilities may be used to ramp up the supply of power. Such scale effects could increase ambient air pollution. The author clearly has a nice empirical fact but not a great story for what is the true data generating process.

I have not read this paper but it would interest me if he has a placebo control group such as another disease death rate for a disease that does not have an environmental component. If he could show that business cycles have no effect on this "control group"'s death rate then I would be more convinced about his "environmental" hypothesis that pollution and congestion during booms are killing people.