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

  • Chad Cotti

    ()

    (University of Connecticut)

  • Richard A. Dunn

    ()

    (Texas A&M University)

  • Nathan Tefft

    ()

    (University of Washington)

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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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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  1. Melissa McInerney & Jennifer M. Mellor & Lauren Hersch Nicholas, 2013. "Recession Depression: Mental Health Effects of the 2008 Stock Market Crash," CESifo Working Paper Series 4263, CESifo Group Munich.
  2. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
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  5. 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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  10. 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.
  11. Christopher Ruhm, 1994. "Economic Conditions and Alcohol Problems," NBER Working Papers 4914, National Bureau of Economic Research, Inc.
  12. Steven D. Levitt & Jack Porter, 2001. "How Dangerous Are Drinking Drivers?," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1198-1237, December.
  13. Scott Adams & McKinley L. Blackburn & Chad D. Cotti, 2012. "Minimum Wages and Alcohol-Related Traffic Fatalities among Teens," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 828-840, August.
  14. Brenner, M. Harvey & Mooney, Anne, 1983. "Unemployment and health in the context of economic change," Social Science & Medicine, Elsevier, vol. 17(16), pages 1125-1138, January.
  15. Breeden, Douglas T., 1979. "An intertemporal asset pricing model with stochastic consumption and investment opportunities," Journal of Financial Economics, Elsevier, vol. 7(3), pages 265-296, September.
  16. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  17. Ruhm, Christopher J. & Black, William E., 2002. "Does drinking really decrease in bad times?," Journal of Health Economics, Elsevier, vol. 21(4), pages 659-678, July.
  18. 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.
  19. Tefft, Nathan, 2011. "Insights on unemployment, unemployment insurance, and mental health," Journal of Health Economics, Elsevier, vol. 30(2), pages 258-264, March.
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