Oct 30, 2008

The benefits of a recession?

So our friends at Econbrowser show that their Recession Indicator index is at 46.1%. Bad news for the global economy. As economists fight over the forecasts, and try to predict how long and deep the recessions is going to be, all we, human beings do, is wait and see, trying to adjust our habits until the good days come back. Apparently there are not only bad things occurring in recessions. I am not talking about creative destruction and so on; I am talking about other positive side effects of recessions we should be aware of.

Christopher Ruhm , Professor at University of Carolina, has published extensively on the positive effects of the recession on our health. The economics is simple: recessions induce healthier lifestyle. Have you ever thought about quitting smoking? There you go: stop buying cigarettes now and you'll save a lot of a year. Anything we were not doing before bacause too busy, will now suddenly become possible. From a 2003 IZA working paper called "Healthy living in hard times" he says:

"Individuals might adopt healthier lifestyles when the economy weakens because increases in non-market time make it less costly to undertake health-producing activities such as exercise or the consumption of a healthy diet. Reductions in incomes and employment related stress could also decrease the frequency of 'self-medication' by smoking and drinking."

This makes sense, but of course, other factors come into play. How do you finance your health expenditure may still matter a lot. For example in this article, a study conducted in Denmark, it has been found that children born in a recession live on average 15 months less than chlidren born under better conditions. The reason is, as explained by Gerard Van Berg from the Free University of Amsterdam here, that under recession children lack access to good healthcare, or parents are stressed.

So all in all, things aren't good, but neither as bad as we think!

1 comment:

Pierre-Louis said...

I guess recessions are also good for artistic creativity (should lokk at some time series in the US here)...like Nirvana would never have existed without eocnomic hard times...movies are often better in recessions (Forest Gump, Pulp fiction etc...)And also there is more solidarity, people help eahc other out, and have more time for social activities...I like recessions, but nothing is sexier than the economic revival...even though is often comes with a dose of cheesy pop music!