Health effects of the recent financial crisis: has wealth loss contributed to chronic disease treatments and outcomes?

Jinkook Lee, RAND Corporation
Marco Angrisani, RAND Corporation
Srikanth Kadiyala, RAND Corporation

The recent financial crisis was of a magnitude not seen since the Great Depression. Despite its magnitude, the health effects of the recent recession have not been fully understood, particularly with respect to chronic health outcomes. Using panel data available from the United States Health and Retirement Study, we examine the effects of the recent recession on changes in individual chronic health conditions, namely hypertension, diabetes, and psychiatric problems, and chronic disease treatment (medication use and physician visits). Our analytic approach is innovative in two ways. First, using an instrumental variables approach, we establish the causal effects of the recession on health outcomes. Second, using biomarker data, and thus not solely relying on self-report data, we are able to assess changes in health more objectively. Overall we find that individuals who experience substantial losses in financial and housing wealth due to the recent recession are more likely to reduce their medication use for hypertension and psychiatric problems. Consistent with these reductions, they are more likely to report deterioration in their chronic disease status. Our results suggest that for U.S. individuals aged 50+ the recent recession increased the probability of worsening hypertension by 10% and psychiatric disease status by 12% and lowered the medication usage for hypertension by 15% and psychiatric diseases by 8%.