The Dow is Killing Me: Risky Health Behaviors and the Stock Market
Chad D. Cotti
University of Wisconsin - Oshkosh; University of Connecticut - Department of Agricultural and Resource Economics
Richard A. Dunn
Texas A&M University
University of Washington - Department of Health Services; University of Washington - Department of Economics
January 18, 2013
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 macro-economic determinants of health. Existing studies in this literature 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. After accounting for associations with the unemployment rate, we find that large, negative monthly DJIA returns, decreases in the level of the DJIA, and the 1987 and 2008-2009 stock market crashes are associated with worsening self-reported mental health and riskier health behaviors including more cigarette smoking, binge drinking, and fatal car accidents involving alcohol. These results are consistent with models of consumption behavior such as rational addiction models, and they have important implications for research studying the association between consumption and stock prices.
Number of Pages in PDF File: 39
Keywords: Stock market, risky health behaviors, business cycle, alcohol, cigarettes
JEL Classification: I1, E32, G1working papers series
Date posted: January 21, 2013 ; Last revised: June 24, 2014
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