martes, 10 de noviembre de 2015

martes, noviembre 10, 2015

Up and Down Wall Street

Rising Death Rate Belies Robust Economy, High Stocks

Nobel laureate finds disturbing rise in death rates of middle-aged white Americans amid economic angst.

By Randall W. Forsyth           
        
Economic distress can be hazardous to your health—even fatal—especially if you are a middle-aged white American without a college degree.

That’s the disturbing conclusion of a new study by Anne Case and her husband, fellow Princeton economics professor Angus Deaton, who was recently awarded the Nobel Prize in economics.

The rise in death rates among middle-aged, non-Hispanic whites since 1999 resembles that of the height of the AIDS epidemic, which claimed 650,000 lives, but has garnered far less attention, they write in a paper published Monday in the Proceedings of the National Academy of Sciences.

Moreover, the surge in deaths—owing mainly to poisonings from drugs and alcohol, suicide, traffic accidents and liver disease—may be tied to economic insecurity, especially for those with a high school degree or less, they posit. Exposure to the risk of the stock market in defined-contribution retirement plans may add to that economic insecurity, the professors add.

The rise in deaths among American white non-Hispanics aged 45-54 from the late 1990s to 2013 contrasts with the steady declines observed in Canada, Australia, the U.K., France, Germany and Sweden. Moreover, among U.S. whites, death rates from lung cancer, formerly the No. 1 killer, declined while mortality from diabetes was virtually steady despite the increase in that disease owing to rising obesity.

And while overall death rates in this age group still are higher for black non-Hispanics than for white non-Hispanics, deaths from “external causes” have risen in the latter group to above that in the former. Death rates for Hispanics are lowest overall and from external causes, the study showed.

Among middle-aged whites, poisonings from drugs and alcohol overtook lung cancer as the leading cause of death in 2011, with suicides also “poised to do so,” the authors write. Chronic liver disease, typically resulting from alcohol abuse, also was rising sharply.

Drug overdoses have coincided with the sharp rise in availability in opioids, both as prescription painkillers as well as illegally. Tighter restrictions on opioid prescriptions has led to the increased use of heroin, which the economists note has risen in quality, has fallen in price and has become available in areas where it previously had been unknown.

Case and Deaton also found a rise in “morbidity” among middle-aged whites, meaning poor health, pain, psychological distress and difficulty with dealing with the activities of daily living.
There was a large, statistically significant decline in those in this cohort reporting excellent or good health and a corresponding increase in the fraction describing themselves in fair or poor health.

The worsened health helps explain the sharp rise in Social Security Disability in this group, the economists add. “Increased morbidity may also explain some of the recent otherwise puzzling decrease in labor force participation in the United States, especially among women,” they write.
Other economists have mostly overlooked this cause for the drop in the labor force participation rate, according to this discussion at the Wall Street Journal’s Real Time Economics blog.

The rise in mortality has been vastly more acute for middle-aged whites with a high school degree or less, versus those with a bachelor’s degree or more. Those with the least education were four times as likely to die from external causes in 2013 than college graduates or higher; in 1999, that ratio was 2.6 times.

Both mortality and morbidity among middle-aged whites have gotten worse since the Great Recession. The authors write:

“Although the epidemic of pain, suicide, and drug overdoses preceded the financial crisis, ties to economic insecurity are possible. After the productivity slowdown in the early 1970s, and with widening income inequality, many of the baby-boom generation are the first to find, in midlife, that they will not be better off than were their parents. Growth in real median earnings has been slow for this group, especially those with only a high school education. However, the productivity slowdown is common to many rich countries, some of which have seen even slower growth in median earnings than the United States, yet none have had the same mortality experience.”

Economic distress may be due to Americans’ dependence on 401(k) plans to fund their retirements. On that point, Case and Deaton hypothesize:

“The United States has moved primarily to defined-contribution pension plans with associated stock market risk, whereas, in Europe, defined-benefit pensions are still the norm. Future financial insecurity may weigh more heavily on U.S. workers, if they perceive stock market risk harder to manage than earnings risk, or if they have contributed inadequately to defined-contribution plans.”

Barron’s readers are vitally interested in the stock market but they don’t live or die by it. As the wealthiest readers of any magazine or web site, they are fortunate to be far removed from the day-to-day struggles with pain, physical as well as mental and emotional, which besets a large part of the U.S. population.

It is shocking to learn middle-aged, white Americans are suffering premature deaths from alcohol, drugs and suicide, in part because of their economic circumstances. It is also a vastly different economic indicator from the Dow Jones Industrial Average hovering within a few percent of its record.


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