Suicides as a Response to Adverse Market Sentiment (1980-2016)

Agrrawal P, Waggle D, Sandweiss DH (2017) Suicides as a response to adverse market sentiment (1980-2016). PLoS ONE12(11): e0186913.

Posted: 6 Nov 2017

See all articles by Pankaj Agrrawal

Pankaj Agrrawal

University of Maine

Doug Waggle

University of West Florida

Daniel Sandweiss

University of Maine

Date Written: November 2, 2017

Abstract

Financial crises inflict significant human as well as economic hardship. This paper focuses on the human fallout of capital market stress. Financial stress-induced behavioral changes can manifest in higher suicide and murder-suicide rates. We find that these rates also correlate with the Gross Domestic Product (GDP) growth rate (negatively associated; a -0.25% drop [in the rate of change in annual suicides for a 1% change in the independent variable]), unemployment rate (positive link; 0.298% increase), inflation rate (positive link; 0.169% increase in suicide rate levels) and stock market returns adjusted for the risk-free T-Bill rate (negative link; -0.047% drop). Suicides tend to rise during periods of economic turmoil, such as the recent Great Recession of 2008. An analysis of Centers for Disease Control and Prevention (CDC) data of more than 2 million non-natural deaths in the US since 1980 reveals a positive correlation with unemployment levels. We find that suicides and murder-suicides associated with adverse market sentiment lag the initial stressor by up to two years, thus opening a policy window for government/public health intervention to reduce these negative outcomes. Both our models explain about 73 to 76% of the variance in suicide rates and rate of change in suicide rates, and deploy a total of four widely available independent variables (lagged and/or transformed). The results are invariant to the inclusion/exclusion of 2008 data over the 1980-2016 time series, the period of our study. The disconnect between rational decision making, induced by cognitive dissonance and severe financial stress can lead to sub optimal outcomes, not only in the area of investing, but in a direct loss of human capital. No economic system can afford such losses. Finance journal articles focus on monetary alpha, which is the return on a portfolio in excess of the benchmark; we think it is important to be aware of the loss of human capital as a consequence of market instability. This study makes one such an attempt.

Keywords: market sentiment market crash stock market crash and suicides homicide murder public health great depression recession mortgage subprime crisis public policy window

Suggested Citation

Agrrawal, Pankaj and Waggle, Doug and Sandweiss, Daniel, Suicides as a Response to Adverse Market Sentiment (1980-2016) (November 2, 2017). Agrrawal P, Waggle D, Sandweiss DH (2017) Suicides as a response to adverse market sentiment (1980-2016). PLoS ONE12(11): e0186913., Available at SSRN: https://ssrn.com/abstract=3064266

Pankaj Agrrawal (Contact Author)

University of Maine ( email )

Orono, ME 04469
United States

Doug Waggle

University of West Florida ( email )

11000 University Parkway
Pensacola, FL 32514-5750
United States

Daniel Sandweiss

University of Maine ( email )

Orono, ME 04469
United States

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