Financial Crisis and Public Health by liuqingyan

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									What is the evidence of the impact
 of the economic crisis on public
             health?

             David Stuckler, PhD MPH
               Oxford and LSHTM

                         With
Marc Suhrcke, Sanjay Basu, Adam Coutts and Martin McKee
  Disaster?                Blessing?




“Econocide to surge as   “Recession is a lifestyle
recession bites”         blessing in disguise”
        – BBC Mar 2009            – Times Oct 2008
                           Great Depression:
                                 not so bad?




Source: Hanley 1931 Life   Sources: NYT Oct 1930; AP 1932; WP 1930
Evidence
- Income ↓ 30%

- All-Cause Mortality
Rates ↓ 10%

- Suicide ↑40%
New Deal   Prohibition
Post-Soviet Depression: devastating

            Alcohol and Surrogates



           Prisons and Tuberculosis



            Rising Unemployment
Overview
- Income↓ 30%
- All-Cause Mortality
Rates ↑ 20%
- Suicide ↑about 40%
But important variations:
Worse in countries with:                              Russia & Belarus
- rapid economic change,
- weak social protections,
- low social capital


Cuba, Finland:
- Incomes fell but health
stable




              Source: Stuckler et al 2009 Mass privatisation and the post-communist mortality crisis Lancet
      IMF Programs and TB Control

- Gov Spending↓ 8%

- Doctors ↓ 8%

- Directly Observed
Therapy avg. ↓ 40%

- TB incidence ↑ 17%



 Source: Stuckler et al 2008 IMF Programs and Tuberculosis outcomes PLoS Med
             Lessons?




 Social        Social    Drugs and
Protection    Cohesion    Alcohol
               Unemployment-Mortality
1% rise in
unemployment
associated with:
- 0.8% ↑Suicide
- 0.8% ↑Homicide
- 1.4% ↓Traffic
        death

No effect on all-
cause mortality
Source: Stuckler et al 2009 Lancet
Some populations more vulnerable
                                                                  Spain                                                                                                                           Sweden
                                            Average Labour Market Protection: $88 per head                                                                                Average Labour Market Protection: $362 per head




                                                                                                                                                                                                             Unemployment Rate (Labour Force Surveys)




                                                                                                                                                                                                                                                                                               10
                                                                                                                                                            30
                                                                                                                                                25
                                                                  Suicide Rates per 100,000 (under 64)
12




                                                                                                                                                                                                                                                                                               8
11




                                                                                                                                                20




                                                                                                                                                            25
10




                                                                                                                                                                                                                                                                                               6
                                                                                                                                                15




                                                                                                                                                            20
 9




                                                                                                                                                                                                                                                                                               4
 8




                                                                                                                                                10




                                                                                                                                                                                                                                                                                               2
                                                                                                                                                            15
                                    1980       1985        1990                                          1995                2000        2005                    1980          1985          1990          1995                                         2000   2005
                                                                       Year                                                                                                                         Year

                                                   Suicide Male                                            Unemployment Rate                                                      Suicide Male               Unemployment Rate



                                                                                                                                                United Kingdom
                                                                                                                                 Average Labour Market Protection: $95 per head
                                                                                                                8.5




                                                                                                                                                                                             12
     Suicide Rates per 100,000 (under 64)




                                                                                                                                                                                                                                                                Unemployment Rate (Official)
                                                                                                                                                                                             10
                                                                                                                      8




                                                                                                                                                                                             8
                                                                                                                7.5




                                                                                                                                                                                             6
                                                                                                                      7




                                                                                                                                                                                             4
                                                                                                                6.5




                                                                                                                          1970         1980          1990               2000          2010   2
                                                                                                                                                     Year

                                                                                                                                          Suicide            Unemployment Rate
                  Social Protections Help…
Each 100 USD
greater social
spending reduced the
effect on suicides by:
- 0.38%, active labour
market programmes
- 0.23%, family support
- 0.07%, healthcare
- 0.09%,unemployment
benefits
                                     Spending> 190 USD no effect of
                                     unemployment on suicide



Source: Stuckler et al 2009 Lancet
      Recommendations

• Active Labour Market Programmes


• Health Stimulus Funding


• Evidence-Based Crisis Response Plan
An opportunity for whom?
Appendix
  East Asian Financial Crisis:
  it depends




Sources: Hopkins 2006 Health Policy; Chang 2009 Soc Sci Med
     Implications for Europe?
1) Social spending to re-integrate and prevent
job loss appears effective

2) Effects not as bad as some suggest

3) Potential long-term health effects (nutrition)

4) Vulnerable groups at greater risk (within-
country inequality)

5) Vulnerable populations, budget cuts (e.g. IMF
programs)
            Rhetoric or reality?
-―Grave debt crisis‖;
―public finances out of
control‖

BUT
-Debt/GDP lower than
US, France, Germany,
EU average
-About same as 10
years ago
                                   UK Debt

AND
- Temporary deficits OK
Dow and Deficit
           Future Research?
1) Evaluate Prohibition & New Deal

2) Investigate East Asian Crisis

3) Iceland, nutrition & dietary change

4) Health co-benefits to social protections

5) Study IMF programs effects

6) Speculative finance and commodity bubbles
 Some Underlying Publications
Stuckler, D., S. Basu, M. Suhrcke, A. Coutts, M. McKee. 2009. The public health effect of economic crises and
alternative policy responses in Europe: an empirical analysis. The Lancet. 374(9686):315-23

Stuckler, D., L. King, and M. McKee. 2009. Mass privatization and the postcommunist mortality crisis: a cross-
national analysis. The Lancet. 373(9661): 399-407

Stuckler, D, S. Basu, M. Suhrcke, A. Coutts, M. McKee. 2009. The health implications of financial crisis: A review
of the evidence. Ulster Medical Journal. 78(3): 142-5

Lock, K., D. Stuckler, K. Charlesworth, M. McKee. 2009. Potential causes and health effects of rising global food
prices. British Medical Journal. 339:b2403

Stuckler, D and S. Basu. 2009. The International Monetary Fund's effects on global health: before and after the
2008 financial crisis. International Journal of Health Services. 39(4): 771-81.

Stuckler, D., S. Basu, and L. King. 2008. International Monetary Fund programs and tuberculosis outcomes in
post-communist countries. Public Library of Science Medicine 5(7): e143

Stuckler, D., L. King and A. Coutts. 2008. Understanding privatisation's impacts on health: Lessons from the
Soviet Experience. Journal of Epidemiology and Community Health 62(7): 664.

Stuckler, D., S. Basu, M. McKee, L. King. 2008. Mass incarceration can explain population increases in TB and
multi-drug resistant TB in European and central Asian countries. Proceedings of the National Academy of
Sciences. v105(36):13280-5.

Stuckler, D., C. Meissner and L. King. 2008. Can a bank crisis break your heart? Globalization and Health 4(1):1-
12.

Stuckler, D. 2008. Population causes and consequences of leading chronic diseases: A comparative analysis of
prevailing explanations. The Milbank Quarterly 86(2):273-326.
I. Great Depression
When the full record of the year 1931 is written, no chapter will
be more striking than the one dealing with public health. The
country was in the grip of the most serious industrial
depression in a generation...By all the signs and all the
precedents, hard times so seriously prolonged should have
brought in their train disease and death.

Actually, 1931 was one of the healthiest years in the history of
the country. The evidence is overwhelming.

                       – New York Times, Jan 5th, 1932
                       Empirical Setup
Sample and Period: 114 U.S. Cities, 1929-1937

‗Shock‘: Bank Suspensions: Federal Deposit Insurance Corporation
 – percentage of banks suspended in calendar year

Mortality: U.S. Bureau of the Census
 – Crude death rates for >30 causes
 – Epidemiology: city-level, weighted U.S. urban populations
 – Econometric: state-level, weighted U.S. state means

Economic and Demographic Controls:
 –Urbanisation Rates, Literacy Rates, Percentage Black Ethnicity, Age-structure



Fixed Effects + Hodrick Prescott Filter



                                     Thanks to Price Fishback for collecting data
Immediate Causes of Death
Effects of the Great Depression
Potential Role of Prohibition
II. Postcommunist Mortality Crisis
Three million excess deaths
Privatisation & Mortality
       Unemployment: A mediating factor




Adjustment for unemployment reduces privatisation coefficient by :
-10% (mass privatisation program)
- 25% (1 unit on EBRD scale)
Social Capital: A protective factor
                           Empirical Setup
Sample and Period: 26 Postcommunist CEE and FSU Countries, 1991-
2002

‗Shock‘: Mass Privatization: EBRD and WB
 – transferring at least 25% of large-state owned enterprises to the private
   sector within 2 years
 – jump from 1 to 3 on EBRD large-scale privatisation index

Mortality: WHO and UNICEF
 – Age-standardised mortality rates in working-age men (15-59)
 – Life expectancy, alcohol-related mortality rates, suicide rates

Economic and Demographic Controls: WB, EBRD, ILO
 – Price liberalisation, Trade liberalisation, GDP per capita, Democratisation
  Index, Dependency Ratio, Urbanisation Rates, Education Levels

Two Way Fixed Effects + Control Function

      AMR it    PRIVit  Xit  it  i  t  it
Clue #1: Working-Ages
Clue #2: Men
Russian Life Expectancy
Clue #3: Immediate Causes: Heart Attacks,
           Accidents, Suicides
        Clue #4: Healthcare Collapse?
                                                  700
• Death rate from avoidable
                                                  600
  mortality in UK and Russia                                       Russia
  similar in 1965, when little                    500




                                 deaths/100,000
  could be done                                   400

• Gap began to widen in                           300

  1970s, and has continued to                     200
                                                                            UK
  do so since                                     100

• It rose rapidly in the early                      0
                                                    1965   1975     1985         1995
  1990s before falling back                                       Year
Shock Therapy versus Gradualism

 ―Despite economists‘ reputation for never being able to agree
 on anything, there is a striking degree of unanimity in the
 advice that has been provided to the nations of Eastern
 Europe and the former Soviet Union (FSU). The legions of
 economists who have descended on the formerly Communist
 economies have provided advice very similar … The three ―-
 ations‖—privatization, stabilization, and liberalization —must all
 be completed as soon as possible.‖

                        Lawrence Summers (1994: 252-253)
  Potential Health Effects of Mass Privatization
                                Mass Unemployment                        ↑ Adult mortality



Mass Privatization             Reduced Social                            ↑ mortality
                               Provision

                                Firm Failure                             ↑ mortality



                 ―… I was the person sent to Russia to live in the factories and feed back
               information to the bank. I spent months in the factories. In one, I slept in an
               empty ward in the sanatorium. I realised very quickly that the master plan of
                privatising Russian industry overnight was going to impose huge costs on
              hundreds of thousands of people. These factories were producing goods that
             once they were launched, no one would want in a too competitive market. They
            would have to slash tens of thousands of jobs. But also, these factories provided
              schools, hospitals, health care and retirement - cradle to grave. I raised these
            concerns in Washington, to say there weren't any safety nets in place. It became
             clear to me that it was really a political play, that they wanted to take assets out
                    of the state's hands, so the Communist Party wouldn't come back.‖
                              -- WB administrator overseeing Mass Privatization in Russia
Russia & Belarus
  Mass Privatization and Life Expectancy
  Postcommunist Countries
                                             Mass Privatizers     Non Mass Privatizers

                                                                                           71




          Life Expectancy at Birth (years)                                                 70



                                                                                           69



                                                                                            68
1991                                         1994               1997                     2000
                                                        Year
  Data Source: WHO European Health for All Database 2007
Table 2. Effect of Privatization on Male Life Expectancy in
             Transition Countries, 1991-2002
Covariates                (1)          (2)         (3)
                         -1.58
Mass Privatization                     –            –
                       (0.23)***
EBRD Average                          -0.49
                           –                        –
Privatization Index                 (0.18)**
EBRD Cumulative                                     -0.03
                           –           –
Privatization Index                                (0.03)
                           1.61         1.81         1.79
Log(GDP per capita)
                       (0.30)***    (0.30)***   (0.35)***
EBRD Price                -0.22        -0.26        -0.28
Liberalization Index     (0.15)       (0.14)       (0.15)
Heritage Foundation        0.24         0.25         0.22
Democracy Index        (0.05)***    (0.06)***   (0.06)***
                          -0.74        -0.64        -0.63
Military Conflict
                        (0.29)**     (0.30)*      (0.31)*
Percentage of             -0.63        -0.45        -0.39
Population Urban       (0.14)***    (0.13)***    (0.14)**
Population                -0.08        -0.15        -0.16
Dependency Ratio         (0.08)       (0.06)      (0.07)*
Percentage of
                          -0.01       -0.02        -0.01
Population with
                         (0.01)      (0.02)       (0.02)
Tertiary Education
                         Working-Age Men

  Table 3. Effects of Mass Privatization and Log GDP per Capita on Log Male Death Rates
                        in 25 Transition Countries by Age, 1991-2002
Covariates             Infanta      Under-5a         5-14          15-59          60+

                       2.92%*        2.00%          0.20%       13.51%***      1.32%***
Mass Privatization
                        (1.44)        (1.49)         (0.95)        (2.31)        (0.38)
Log GDP per          -0.10%***     -0.11%***      -0.05%***     -0.14%***      -0.02%**
capita                  (0.01)        (0.01)         (0.01)        (0.03)        (0.01)
         Path Analysis: Alcohol and Unemployment
                Web Annex A2. Effects of Mass Privatization and Log GDP per Capita on Pathways of Population Health Impacts
                                 Alcohol               Log Male           Log Male                                                Log Male
                                                                                              Log Male          Homicide                              Log Crime
 Determinant                  Consumption            Alcohol Death       Heart Disease                                          Unemployment
                                                                                             Suicide Rates       Rates                                  Rates
                            (Liters per Capita)          Rates           Death Rates                                                Rates
                                    0.81                14.64%               5.98%              16.86%             5.60             44.83%               4.19%
 Mass Privatization
                                 (0.24)***              (4.21)**           (1.85)***           (4.51)***         (1.85)**          (13.62)***            (4.13)
                                   -0.04                 -0.11%             -0.10%               0.04%             -0.88            -0.66%              -0.23%
 Log GDP per Capita
                                   (0.30)                 (0.06)           (0.02)***             (0.08)            (2.45)          (0.15)***           (0.05)***
Note: Robust panel-corrected standard errors in parentheses. Results presented from seven separate regression models. Two-way fixed effects models, using Prais-
Winsten transformation to adjust for country-specific serial correlation, control for the effects of EBRD price liberalization index, occurrence of military conflict,
percentage of population urban, age-dependency ratio, and percentage population with tertiary education.
* = p<0.05, ** = p<0.01, *** = p<0.001 (two-tailed tests).
  Job Loss & Health: Evidence from RLMS

- Hazard Dying: ↑~3-4-fold

- Odds Excess Vodka: ↑40%
Who loses jobs?
Chance job loss next
year:
10.4% if privatized
9.1% if Russian
private
7.9% if foreign
6.2% if state

- 40% higher risk at
private firm
Failing Tuberculosis Control
Inaccurate and Misleading Data
          Life expectancy at birth, in years
  71

  70

  69

  68

  67

  66

  65

  64

  63

  62
   1970    1980            1990           2000   2010
Russia’s regions: pace of economic change and LE
       Table 3. Vodka consumption per capita


Year               Belarus                     Russia

1990                 3.6                        3.6

1991                 4.4                        4.1

1992                 4.8                        3.8

1993                 5.9                        4.9

1994                 5.6                        5.5

1995                 5.5                        7.0

1996                 6.4                        5.5

1997                 6.2                        5.5

1998                 5.8                        6.0

1999                 5.1                        6.5

2000                 4.2                        6.5

2001                 3.8                        6.3

2002                 3.7                        6.2

2003                 3.2                        6.2
        Table WB7. Effect of Male Adult Mortality and Life
               Expectancy on Log GDP per Capita

 Health Measure                           Effect on Log GDP per Capita

                                                      -0.45%***
 Adult Male Mortality Rates
                                                         (0.12)
                                                       0.04***
 Male Life Expectancy
                                                         (0.01)
Note: Coefficients calculated as semi-elasticities presented; Robust standard errors in
parentheses. Models also control for EBRD price-liberalization index, EBRD trade
liberalization index, democratization, population dependency, the percentage of
population living in urban settings, education rate, and country-specific fixed effects.
Significance at * p-<0.05, ** - p<0.01, *** - p<0.001
           Probability of surviving from 20 to 60




    W Germany
England & Wales
       Lithuania
          Latvia                                     Women
        Estonia                                      Men
        Ukraine
        Russia
        Belarus

                   0   0.2     0.4     0.6     0.8     1
                            Health Resources
Covariates              Model 1:      Model 2:       Model 3:      Model 4:      Model 5:
                       Physicians      Nurses        Dentists      Hospital      Inpatient
                                                                     Beds       Admissions
                         -0.15*         -30.31        -3.92**       -0.72**        0.08
Mass Privatization
                         (0.07)        (16.32)        (1.37)        (0.20)        (0.36)
                          0.10         -44.31*         4.00**         0.22          2.05**
GDP
                         (0.07)        (18.61)        (1.47)         (0.22)        (0.41)
                          0.07**       18.21**         0.41           0.32**        0.74**
Urbanization
                         (0.02)        (5.23)         (0.42)         (0.06)        (0.11)
                         -0.01           6.21*         0.70**         0.16**        0.11
Dependency
                         (0.01)         (2.66)        (0.22)         (0.04)        (0.06)
                          0.11          37.99         -1.89           1.53**        2.98**
Fertility
                         (0.11)        (23.81)        (2.01)         (0.33)        (0.58)
                         -0.06          -18.40         1.24          -0.31**       -0.34
Price Liberalization
                         (0.03)         (8.69)        (0.70)         (0.10)        (0.19)
                          0.00           0.81         0.16**         -0.01**        0.11**
Education
                         (0.00)         (0.72)        (0.06)         (0.00)        (0.02)

Number of                 286            296           299            278           303
Observations (NxT)
Number of                  26             25            25             26            26
Countries (N)
R2                         0.93           0.94           0.96          0.94          0.96
Note: Models 1 scaled per 1,000 population, Models 2-4 per 100,000 population,
Model 5 per 100 admission; Constant not reported; Fixed Effects with country effects
presented, period effects do not alter results; Prais-Winsten transformation used to
accommodate AR(1) error structure; * = p<0.05; ** = p<0.01 (two-tailed tests)
In writing about Stalinism, John Maynard Keynes
observes that ―We have a fearful example in
Russia today of the evils of insane and
unnecessary haste. The sacrifices and losses of
transition will be vastly greater if the pace is
forced…‖

                          Yale Review, 1933
IV. Recessions in Europe
Men
Women
Other Measures
Interaction Term

								
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