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The Dow is Killing Me: Risky Health Behaviors and the Stock Market

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  • Chad Cotti

    ()
    (University of Connecticut)

  • Richard A. Dunn

    ()
    (Texas A&M University)

  • Nathan Tefft

    ()
    (University of Washington)

Abstract

We investigate how risky health behaviors and self - reported health vary with the Dow Jones Industrial Average (DJIA) and during stock market crashes. Because stock market indices are leading indicators of economic performance, this research contributes to our understanding of the macroeconomic determinants of health. Existing studies typically rely on the unemployment rate to proxy for economic performance, but this measure captures only one of many channels through which the economic environment may influence individual health decisions. We find that large, negative monthly DJIA returns, decreases in the level of the DJIA, and stock market crashes are widely associated with worsening self-reported mental health and more cigarette smoking, binge drinking, and fatal car accidents involving alcohol. These results are consistent with predictions from rational addiction models and have implications for research on the association between consumption and stock prices.

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File URL: http://www.cag.uconn.edu/are/zwickcenter/documents/workingpapers/wp20.pdf
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Bibliographic Info

Paper provided by University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy in its series Working Papers with number 20.

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Length: 48 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:zwi:wpaper:20

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Keywords: stock market; risky health behaviors; business cycle; alcohol; cigarettes;

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References

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  1. Krüger, Niclas A & Svensson, Mikael, 2008. "Good Times Are Drinking Times: Empirical Evidence on Business Cycles an Alcohol Sales in Sweden 1861-2000," Working Papers 2008:2, Örebro University, School of Business.
  2. Cotti, Chad D. & Walker, Douglas M., 2010. "The impact of casinos on fatal alcohol-related traffic accidents in the United States," Journal of Health Economics, Elsevier, vol. 29(6), pages 788-796, December.
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  13. Cotti Chad & Tefft Nathan, 2011. "Decomposing the Relationship between Macroeconomic Conditions and Fatal Car Crashes during the Great Recession: Alcohol- and Non-Alcohol-Related Accidents," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-24, August.
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  16. Charles, Kerwin Kofi & DeCicca, Philip, 2008. "Local labor market fluctuations and health: Is there a connection and for whom?," Journal of Health Economics, Elsevier, vol. 27(6), pages 1532-1550, December.
  17. Ettner, Susan L., 1997. "Measuring the human cost of a weak economy: Does unemployment lead to alcohol abuse?," Social Science & Medicine, Elsevier, vol. 44(2), pages 251-260, January.
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