Effects of the 1980 - 1982 economic recession on satisfaction, mental health and mortality

Ruut Veenhoven and Aldi Hagenaars (Eds)
Universitaire Pers Rotterdam, 1989, The Netherlands, ISBN 90 237 2297 5. 305p.

Chapter 14: full text

by Ruut Veenhoven

This book set out with three questions (chapter 1, page 20):
1) Did wellbeing deteriorate during or shortly after the recession?
2) Were all categories of the population affected to the same degree?
3) Did effects differ between countries?
Let us now consider these questions one by one and take stock of the answers presented in the various chapters of this book.

Question 1:
Did average well-being decline?

There was no general dip in well-being during or shortly after the recession. Only on some aspects did we observe a decline, whereas other aspects of well-being remained at the same level or even improved. Below I will summarize the findings on the basis of the following distinctions: a) The distinction between 'satisfaction', 'mental health' and 'mortality' we started with, b) The distinction between 'economic concern' and 'general well-being' proposed in chapter 7, and c) The difference between 'short-term' and 'long-term' effects, emphasized in chapter 10.

Satisfaction, mental health, and mortality
This book focuses on three aspects of individual well-being: 'satisfaction', 'mental health' and 'mortality'. The observations made on these matters differ.

Economic concern and overall well-being
The data reported in this book relate both to 'economic concerns', such as evaluation of income and perceived employment chances and to 'overall well-being' as reflected in life-satisfaction, mental health Economic concern changed more than overall well - being.

Short-term and long-term effects
The focus of this book is on short-term effects. Question 1 is about well-being, during or shortly after the recession. The recession is in fact still too recent to observe long-term effects. Yet some of the contributions considered earlier recessions as well and estimated the long-term effects of these (chapters 10, 11, 12)

Question 2:
All categories harmed to the same degree?
The above observations show that the average citizen appeared not to be really hurt during and shortly after the recession. Still it is possible that at least a part of the population suffered harm. There is indeed evidence of serious deterioration in some specific social categories.

Greater satisfaction decline and less satisfaction recovery among the least satisfied
The observed dip in satisfaction was most pronounced in the social categories that were already least satisfied. 'Satisfaction with income' declined more sharply at the lowest income level (chapters 4, 5), among transfer incomes (chapter 3) and among the unemployed (chapter 5). Likewise the decline in 'life satisfaction' was steeper in the low income Category, single persons, the unemployed and the long-term disabled (chapters 2, 5). Not surprisingly the observed rise in 'job satisfaction' concerned employed people only (chapter 5). These differences indicate that the disadvantaged suffered most under the recession.

Summary scheme:
Observed changes in individual well-being during or shortly after the 1980/82 economic recession in rich western nations.

  Economic concerns Overall well-being
General pattern Dip in perceived employment chances (5, 7)

Dip in evaluation of income and level of living (3, 4, 5)

Peak in anxiety about future (7)

Peak in satisfaction with job, education and housing (4, 5, 7)

Dip in satisfaction with welfare-state (4, 5)

No change in satisfaction with health, housing, daily work (4, 7)

Slight dip in life-satisfaction (2, 5)

Slight peak in worrying (7)

No greater use of psychotropic drugs (8)

No greater incidence of psychosomatic symptoms (4, 7)

Less complaints presented to doctors (6, 9)

Possibly greater mortality (issue undecided) (10, 11, 12)

Small rise in suicide during recession and clear drop after (12, 13)

Differences between social categories Dip in evaluation of income greater and more lasting in lowest income bracket and welfare dependants (3, 4, 5)

Dip in perceived employment chances greater and more lasting among low educated and unemployed (5, 7)

Greater peak in anxiety about future among low educated (7)

Dip in life-satisfaction more pronounced among the elderly, single people, the unemployed, the disabled and low incomes (2, 4)

Dip in complaints presented to doctor similar across sex and social class (6)

No change in psychosomatic symptoms equal at all educational levels (7)

Rise in suicide mainly among people already on the edge (13)

Differences across nations Dip in income satisfaction greater in the most afflicted countries (3) Dip in life-satisfaction least in countries with highest social security (2)

No difference in effect on life-satisfaction with respect to size of countries, wealth and severity of recession (2)

No greater use of psychotropic drugs in most afflicted countries (8)

In countries with high social security rise in use of tranquilizers, in low social security countries rise in use of neuroleptics (8)

Numbers in brackets refer to earlier chapters in this book.

As we have seen 'anxiety about matters of money' lessened after the recession. Yet several of the above categories were seen to lag behind in this recovery. 'Satisfaction with income' did not recover as completely among welfare recipients (chapter 3) or at the lowest income level (chapter 5). Not surprisingly 'optimism about employment chances' was retained among working people, but not among the unemployed.
These differences indicate a growing split in society: not a revival of traditional class differences, but new differences between a majority of economically active citizens and a minority of welfare dependant rejects (chapter 5).

No greater harm to mental health among the socio-economically-disadvantaged
Mental health is typically less good at the lowest end of the social ladder and - irrespective of social status - among females and the unemployed. These differences seem not to have been aggravated by the recession. The report of 'psychosomatic complaints' in three educational categories was found to remain at the same level through the years (chapter 7) and the number of psychosomatic complaints presented to the general practitioner declined equally during the recession in both sexes and all social class categories. The only differences observed concerned the unemployed who were found to have reduced their number of complaints somewhat more in (earlier) times of economic decline (chapter 9).
These latter findings do not fit the above observation of greater harm to the disadvantaged and a growing split in society. This may mean that the difference is rather superficial and manifests itself only at the level of satisfaction. It is also possible that the chapters on mental health in fact compared other categories, focusing more on traditional class differences than on the new inequalities.

Suicide increase mainly among people already on the edge
Chapter 13 showed an increase in suicide during the recession in the Netherlands and plausibly argues that reaction with suicide is most likely among disturbed people who are also more likely to lose their job. In this respect the recession hits the psychologically most vulnerable disproportional

Question 3:
Did effects differ between countries?

All the contributions in this book concern rich Western nations. Six of them compared changes in well-being across borders (chapters 2, 3, 7, 8, 10, 13).

Income decline felt in all EC-countries
Chapter 3 documented that citizens in all the EC-countries except Italy have experienced a deterioration of their financial situation. Yet satisfaction with current income levels dropped only in half the cases.

Life-satisfaction and drug-use most affected in countries with least social security
The chapters on life-satisfaction (2) and drug-sales (8) found more variation. These differences were found to be unrelated to the wealth of the country or to the severity of the crisis, but do seem to have something to do with the level of social security.
Average life-satisfaction appears to follow economic ups and downs most closely in the EC-countries that provide their citizens least social security. This suggests that social security buffers the adverse effects of economic decline.
Drug-sales reacted differently in countries of high and low social security as well. In the former countries sales of tranquilizers rose, in the latter sales of neuroleptics. Tranquilizers are typically used to reduce minor fears and tensions, while neuroleptics primarily serve to treat severe psychiatric disorders: in particular psychosis. This suggests that in countries that provide little social security the recession really pushed some people over the edge, while in countries of high social security it merely raised anxiety.
Lastly there are differences in the size (not direction) of statistical links between mortality rates and macroeconomic indicators in eight OECD countries (chapter 10). The regression coefficients are higher in the countries that typically provide modest social security (USA, Japan) and low in countries known for their high level of social security (France, UK). The relation is not perfect however, coefficients being high in Germany and Norway and low in Italy and Canada.
There is thus a tendency of fewer harmful effects in the countries that invest relatively much in social security. This is a noteworthy achievement. Unfortunately this achievement seems to meet little public recognition: satisfaction with state-welfare-care declined during the recession in both Denmark and Germany (chapters 4, 5).

Mortality model applies in 8 OECD countries
Brenner's analysis of the relation between economic fluctuations and mortality rates in 8 OECD countries shows consistent negative coefficients with indicators of economic growth (income per capita, wages, labor force participation rate, stock market index) and positive ones with indicators of economic decline (unemployment, business failures). The size of the correlations varies widely however. As noted above the coefficients tend to be smaller in the countries with the most elaborate social security. The difference in timelag is quite variable as well. Still the findings underscore Brenner's claim that economic fluctuations pan out similarly in the modern industrialized nations.

To sum up
The 1980/ 1982 economic recession did not really hurt the average citizen in the Western welfare states: at least not as yet. The decline of the economy did raise worries about money and employment, but it hardly affected satisfaction with life-as-a-whole, nor did it noticeably damage mental health. Some segments of the population were worse afflicted however, in particular people who lost their job and became welfare dependent. In these categories satisfaction declined considerably and did not quite recover. Possibly mental health and longevity have also declined in these categories or will decline in the future.

Wagstaff, A., Timeseries analysis of the relationship between unemployment and mortality: a survey of econometric critiques and replications of Brenner's studies. Social Sciences and Medicine, 1985, vol. 21, p. 985-996.