The Impact of the Great Recession on Health and Welfare

Joint Applied Micro Seminar

Co-authors: Matthew J. Notowidigdo, Frank Schilbach, and Jonathan Zhang

Abstract
We leverage spatial variation in the severity of the Great Recession across the United States to estimate its impact on health and explore implications for the welfare consequences of recessions. We estimate that the Great Recession reduced average, annual age-adjusted mortality rate by 2.3 percent, with effects persisting at least 10 years. The effects appear across demographic groups and causes of death, with the elderly responsible for about three-quarters of the total mortality reduction. Incorporating our estimates of recession-induced mortality declines into the standard analysis of the welfare cost of recession-induced consumption changes substantially reduces the implied welfare cost of the Great Recession, particularly at older ages where it may even have been welfare-improving.