The Dow is Killing Me: Risky Health Behaviors and the Stock Market

Abstract

We investigate how risky health behaviors and self-reported health vary with the Dow Jones Industrial Average (DJIA) and during stock market crashes. Because stock market indices are leading indicators of economic performance, this research contributes to our understanding of the macroeconomic determinants of health. Existing studies typically rely on the unemployment rate to proxy for economic performance, but this measure captures only one of many channels through which the economic environment may influence individual health decisions. We find that large, negative monthly DJIA returns, decreases in the level of the DJIA, and stock market crashes are widely associated with worsening self-reported mental health and more cigarette smoking, binge drinking, and fatal car accidents involving alcohol. These results are consistent with predictions from rational addiction models and have implications for research on the association between consumption and stock prices.

A Review of Health Consequences of Recessions Internationally and a Synthesis of the US Response during the Great Recession

“…We identified 78 studies that reveal a relationship between recessions and mental health outcomes. 12,17,18,25,[37][38][39]46,49,51,56,57,59, In the current recession, five studies consistently found that mental health deteriorated. 61,63,75,82,103 The most consistent results relate to suicides.…”

“…21,25,[42][43][44][45][46][47][48][49][50][51][52][53][54][55][56][57][58][59] While there is evidence of a decrease in overall alcohol consumption during recessions, 5,53 studies also consistently find an increase in alcohol related traffic accidents 55 (despite an overall decline in deaths from road traffic accidents), binge drinking, 5 and alcohol related hospitalization during economic contractions. 25 In other words, while on average some people reduce their drinking of alcohol, a subpopulation increases its use to potentially dangerous levels, reflecting that the hypotheses above may apply variously to different groups.…”

“…We identified 34 studies that assessed the relationship between recessions and chronic diseases such as cardiovascular disease and diabetes, self-reported health, or mortality from chronic conditions. 12,25,26,38,43,44,57,67,69,106, The relationship between chronic conditions and unemployment requires methodological strategies to compensate for biases (e.g., that those who are already more ill are more likely to become unemployed). [28][29][30][31][32] Many individual level studies find that those who are laid off are more likely to die earlier 19,[25][26][27]153 ; but without longitudinal data of sufficient duration or controls for previous health, it is not possible to assess the direction of the relationship (from unemployment to illness, and vice versa, creating a vicious spiral).…”

The self-medication hypothesis: Evidence from terrorism and cigarette accessibility

“…A study by Barnes and Smith (2009) uses longitudinal data in an instrumental variable (IV) model, exploiting geographic variation in local labor market conditions as a source of exogenous variation, finding that a 1 percent increase in the probability of becoming unemployed causes an individual to be 2.4 percent more likely to continue smoking. Cotti, Dunn and Tefft (2014) finds that large negative stock market shocks are widely associated with increased cigarette consumption and purchases, independent of other macroeconomic labor conditions. In summary, higher financial stress is associated with higher rates of smoking.…”

The Impact of Housing Prices on Health in U.S. Before, During and After the Great Recession

“…Tekin et al (2013) With regard to a sharp fall in value of wealth, Cotti et al (2015) reveals that stock market crashes are related to declines in self-reported mental health and risky health behaviors such as more smoking and drinking. Fiuzat et al (2010) show that there is a significant correlation between periods of stock market crashes and growth in acute myocardial infarction (AMI) rates.…”