Do Unhealthy Cities Produce Unhealthy Returns?

40 Pages Posted: 24 Feb 2024

See all articles by Nicole Y. Choi

Nicole Y. Choi

University of Wyoming - Department of Economics and Finance

John R. Nofsinger

University of Alaska Anchorage

Corey A. Shank

Miami University

Date Written: January 19, 2022

Abstract

We examine how firms headquartered in poor health communities affect their stock returns and valuations. We find that poor health throughout a community, measured through obesity rates, self-reported poor health status, and self-reporting poor physical or mental health, lowers stock returns and creates lower valuations. Specifically, we find that a 1% increase in overweight rates is associated with $100 billion in lost value to the United States stock market. Furthermore, this effect is more prominent in stocks with more retail investors. This suggests that poor community health influences local investor behavior more strongly than employees affect local stock returns. These results have important implications as obesity rates continue to rise throughout the world.

Keywords: Stock Performance, Health, Obesity, Mental Health, Physical Health

JEL Classification: E70, G10, G40

Suggested Citation

Choi, Nicole Y. and Nofsinger, John R. and Shank, Corey, Do Unhealthy Cities Produce Unhealthy Returns? (January 19, 2022). Available at SSRN: https://ssrn.com/abstract=4729937 or http://dx.doi.org/10.2139/ssrn.4729937

Nicole Y. Choi

University of Wyoming - Department of Economics and Finance ( email )

P.O. Box 3985
Laramie, WY 82071-3985
United States

John R. Nofsinger

University of Alaska Anchorage ( email )

3211 Providence Drive
Anchorage, AK 99508
United States

HOME PAGE: http://faculty.cbpp.uaa.alaska.edu/jnofsinger/

Corey Shank (Contact Author)

Miami University ( email )

Oxford, OH 45056
United States

HOME PAGE: http://coreyshank.com

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