The Business Cycle and Health Outcomes in the U.S.

The U.S. spends about twice as much per person on healthcare, yet the disease burden remains higher in the U.S. than in comparable countries. Obesity is one of the main drivers of preventable chronic disease and escalating healthcare costs. Although health is perceived as an individual and social outcome, the business cycle also affects individual health via time and income constraints. While the effect of macroeconomic shocks on health outcomes has been studied extensively, results remain inconclusive. This may be due to the focus on one particular disease for short timeframes in most studies. Thus, my analysis uses longitudinal data over 30 years and fixed effects models to examine the effect of macroeconomic conditions on obesity, diabetes, hypertension, depression, congestive heart failure, and heart attack or myocardial infarction. I find that health varies countercyclically with the business cycle when both real GDP and the unemployment rate are used as proxies: as the economy improves, the probability of disease increases and health declines. A 1% increase in real GDP increases the probability of obesity, diabetes, hypertension, and depression by 0.264%, 0.021%, 0.102%, and 0.030%, respectively (p<0.05). A recession year increases this countercyclical effect (p<0.05). The business cycle does not have a statistically significant impact on probability of heart diseases. My research fills several gaps in the existing literature by studying a single cohort for over 30 years and spanning five recessions, analyzing numerous health outcomes to capture overall health and wellbeing, and using various measures for the business cycle. The results of this study contribute to the debate in the literature on the impact of the business cycle on health. In conclusion, my research provides valuable knowledge on health determinants, the health costs of recessions, and potential public health policy responses.