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

40 Pages Posted: 21 Jan 2013 Last revised: 28 Aug 2016

Chad D. Cotti

University of Wisconsin - Oshkosh; University of Connecticut - Department of Agricultural and Resource Economics

Richard A. Dunn

University of Connecticut - Department of Agricultural and Resource Economics

Nathan Tefft

Bates College

Date Written: January 18, 2013

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 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.

Keywords: Stock market, risky health behaviors, business cycle, alcohol, cigarettes

JEL Classification: I1, E32, G1

Suggested Citation

Cotti, Chad D. and Dunn, Richard A. and Tefft, Nathan, The Dow is Killing Me: Risky Health Behaviors and the Stock Market (January 18, 2013). Kilts Center for Marketing at Chicago Booth – Nielsen Dataset Paper Series 1-001. Available at SSRN: https://ssrn.com/abstract=2202418 or http://dx.doi.org/10.2139/ssrn.2202418

Chad D. Cotti

University of Wisconsin - Oshkosh ( email )

800 Algoma Blvd
Oshkosh, WI WI 54901
United States

University of Connecticut - Department of Agricultural and Resource Economics ( email )

1376 Storrs Road, Unit 4066
Storrs, CT 06269
United States
9202034660 (Phone)

Richard A. Dunn

University of Connecticut - Department of Agricultural and Resource Economics ( email )

1376 Storrs Road, Unit 4066
Storrs, CT 06269
United States
860-486-0111 (Phone)

Nathan Tefft (Contact Author)

Bates College ( email )

Lewiston, ME 04240
United States

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