The Impact of the Great Recession on Mortality: A Dynamic Factor Analysis

We use a dynamic factor time series model to estimate the national mortality impact of the Great Recession. In aggregate, the Great Recession reduced the average annual, age-adjusted mortality rate by about 2 percent, with effects persisting for at least a decade. In a calibrated model of the welfare effects of the estimated impacts of the Great Recession on consumption and mortality, we find that the welfare gain from the estimated mortality decline is quantitatively significant relative to the welfare loss from the estimated consumption decline. The estimated mortality decline is also quantitatively close to prior mortality estimates using cross-sectional variation in the severity of the Great Recession, implying limited general equilibrium effects of the Great Recession on mortality. More broadly, our findings suggest that prior evidence from local labor markets that recessions are good for health can be extrapolated to the likely mortality consequences of nationwide recessions.