The business cycle and health behaviors

Abstract

While it is well documented that economic expansions provide widespread and immediate financial benefits, the evidence on how an economic downturn affects individual's health behaviors is surprisingly mixed. In this paper, we take a structural approach to investigate the effects of wages and working hours on health behaviors of low-educated persons using variations in wages and hours caused by changes in local economic activity. In the empirical analysis, we adopt a two-sample instrumental variables approach to combine the data on individual health behaviors from the Behavioral Risk Factor Surveillance System (BRFSS) and the National Health Interview Survey (NHIS) with the data on individual employment from the Current Population Survey (CPS). The total sample size of the combined CPS-BRFSS data for the time period of 1984-2005 is 967,594, while that of the combined CPS-NHIS data for the time period of 1976-2001 is 364,078. We find that increases in wages caused by economic expansions are associated with greater consumption of cigarettes in the United States. We also find that increases in hours of work caused by economic expansions are associated with more cigarette consumption, but less physical activity and physician visits. More importantly, the evidence suggests that most of such effects associated with changes in hours of work can be attributed to the changes at the extensive margin of employment, meaning the changes in employment status, rather than the changes at the intensive margin, meaning changes in hours of work conditional on being employed. These findings imply that changes in employment may have heterogeneous impacts on time-intensive and less time-intensive health behaviors and also provide additional evidence on the importance of time in health production, particularly for time-intensive activities.

The Great Recession and Mothers’ Health

“…() found a negligible impact. Dee (), Charles and DeCicca (), Xu and Kaestner () and Deb et al . () provide evidence that drinking increases significantly during recessions…”

Driving through the Great Recession: Why does motor vehicle fatality decrease when the economy slows down?

“…During economic downturns, individuals are hypothesized to have less disposable income to spend on detrimental normal goods such as alcohol and cigarettes (Ruhm, 2000). Although others contend that higher unemployment has no effect (Xu 2013) or might even increase alcohol consumption (Frijters, Johnston, Lordan, & Shields, 2013), Cotti and Tefft (2011) recently find unemployment rates to be negatively associated with drunk-driving fatalities at the state level. In the context of the Great Recession, they suggest that alcohol-related driving fatalities account for a significant amount of the decline in motor vehicle fatalities between 2007 and 2009.…”

Booms, Busts, and Divorce

“…Xu and Kaestner (2010) provide an excellent review of this literature and explore potential mechanisms through which business cycles might impact health. …”