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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 bites” – BBC Mar 2009.

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what is the evidence of the impact of the economic crisis on public health

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

slide2

Disaster?

Blessing?

“Econocide to surge as recession bites”

– BBC Mar 2009

“Recession is a lifestyle blessing in disguise” – Times Oct 2008

slide3

Great Depression:

not so bad?

Source: Hanley 1931 Life

Sources: NYT Oct 1930; AP 1932; WP 1930

slide4

Evidence

- Income ↓ 30%

- All-Cause Mortality Rates ↓ 10%

- Suicide ↑40%

slide5

New Deal

Prohibition

slide6

Post-Soviet Depression: devastating

Alcohol and Surrogates

Prisons and Tuberculosis

Rising Unemployment

slide7

Overview

- Income↓ 30%

- All-Cause Mortality Rates ↑ 20%

- Suicide ↑about 40%

slide8

But important variations:

  • Worse in countries with:
  • rapid economic change,
  • weak social protections,
  • low social capital

Russia & Belarus

Cuba, Finland:

- Incomes fell but health stable

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

slide9

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

slide10

Lessons?

Social Protection

Social Cohesion

Drugs and Alcohol

slide11

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

slide13

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

slide14

Recommendations

  • Active Labour Market Programmes
  • Health Stimulus Funding
  • Evidence-Based Crisis Response Plan
slide17

East Asian Financial Crisis: it depends

Sources: Hopkins 2006 Health Policy; Chang 2009 Soc Sci Med

slide18

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)
slide19

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
  • AND
  • - Temporary deficits OK

UK Debt

slide21

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
slide22

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.

slide24

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

slide25

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

slide32

Unemployment: A mediating factor

  • Adjustment for unemployment reduces privatisation coefficient by :
  • 10% (mass privatisation program)
  • 25% (1 unit on EBRD scale)
slide34

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

slide36

Clue #2: Men

Russian Life Expectancy

slide38

Clue #4: Healthcare Collapse?

  • Death rate from avoidable mortality in UK and Russia similar in 1965, when little could be done
  • Gap began to widen in 1970s, and has continued to do so since
  • It rose rapidly in the early 1990s before falling back
slide39

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)

slide40

Potential Health Effects of Mass Privatization

Mass Unemployment

↑ Adult mortality

Mass Privatization

Reduced Social Provision

↑ mortality

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

slide46

Job Loss & Health: Evidence from RLMS

- Hazard Dying: ↑~3-4-fold

- Odds Excess Vodka: ↑40%

slide47

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

slide53

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

slide59

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