Great Recession Saved Lives: Research

The Great Recession showed that, at least in the short run, a severe economic crisis may help people live longer, according to a team of economists led by Amy Finkelstein of the Massachusetts Institute of Technology.

The team found that the 2007-2009 slump improved the age-adjusted mortality rate in a community by 2.3%, or by 0.5% for every 1-percentage-point increase in the community’s unemployment rate, and that the improvement lasted for at least 10 years.

“These estimates imply that the Great Recession provided one in 25 55-year-olds with an extra year of life,” the Finkelstein team wrote in a working paper published behind a log-in wall on the website of the National Bureau of Economic Research.

What it means: An advisor might think that slumps will shorten clients’ lives, by causing stress. The Finkelstein team’s paper suggests that the opposite might be true.

Amy Finkelstein: Finkelstein is famous for her research on insurance-related economics topics such as the tendency for long-lived people to buy lifetime annuities and the surprisingly small size of the U.S. long-term care insurance market.

In 2018, she won a MacArthur Foundation “genius grant.”

Working papers: A working paper is a scientific paper that has not yet been through a full peer review and publication editing process.