Media Briefings

People’s Health ‘Unaffected’ By Financial Crisis Or Recession

  • Published Date: July 2008


When a financial crisis strikes, people are able to avoid damaging their physical health and long-term well-being by changing their spending on food and other items. That is the conclusion of research by Professors Steven Stillman and Duncan Thomas, published in the July 2008 issue of the Economic Journal.
The findings have implications for how governments and international donors respond to financial crises and other economic problems such as high inflation or unemployment. And with the current financial crisis, the results might reassure governments that people’s physical health may not be too badly affected as a result of the economic troubles.
‘If there is a big economic crisis, the right strategy is not necessarily just to blanket the entire country with resources, be it income or food, but to target those resources to people who really need it because apparently the average person is able to do quite well.’ the authors comment.
The study examines patterns of spending and food consumption among Russians between 1996 and 2000. From 1996 to 1998, economic turmoil sent average Russian household incomes plummeting 40. Incomes more than fully rebounded by 2000.
The researchers find that while household spending on food declined and then rose in parallel with income, average family caloric intake changed little over the four years. Families accomplished this by relying more on low-cost, high-calorie foods during economically difficult times.
‘Quantities of starches and dairy are essentially unchanged across the entire sample period. In contrast, fruit and vegetables consumption appears to have adjusted entirely to income variation in terms of quantities’, the researchers explain.
‘In the case of meat, however, the picture is more nuanced: expenditures declined throughout the 1990s with a large decline in 1998; in 2000, expenditures rose but remained below their level in the mid-1990s.’
The source of the researchers’ data is the Russia Longitudinal Monitoring Survey, a representative household survey with information from nearly 18,000 respondents. The study is based on averages and does not apply to families that are particularly destitute, the researchers note.
The study also looks at body mass index as an indicator of sufficient nutrition, and finds that it changed little in response to income variation.
‘The evidence indicates that individuals and households are able to weather short-term fluctuations in economic resources, at least in terms of maintaining body mass and energy intake’, they conclude.
‘The kind of household adaptability we find in the emerging economy of Russia could be applied to advanced and developing nations as well’, they say. ‘We would expect American households to make similar lifestyle changes in response to rising gas prices or Indonesian families to adjust to the effects of the 2004 tsunami.’
The researchers also examine how nutritional status varies with longer-term changes in economic resources. They find that as Russians get richer, they make significant adjustments in terms of both energy intake and diet quality. For example, a 10% increase in available resources results in about a 1% increase in calories, a 7% increase in the fraction of calories from protein and a 30% increase in the fraction of calories from fat.
These responses translate into significant changes in body size. Long-run changes in resources are also associated with a small increase in the weight of adults and a substantial improvement in child height, which is indicative of longer-run health, as well as predictive of economic prosperity in later life.
In sum, to the extent that globalisation results in elevated economic growth, albeit greater volatility, in terms of nutritional status, households do everything they can to exploit the benefits and to mitigate the costs that accompany globalisation.
ENDS
Notes for editors: ‘Nutritional Status During an Economic Crisis: Evidence from Russia by Steven Stillman and Duncan Thomas is published in July 2008 issue of the Economic Journal.
Steven Stillman is at the Motu Economic and Public Policy Research institute in New Zealand. Duncan Thomas is at Duke University.
For further information: contact Romesh Vaitilingam on 07768-661095 (email: romesh@vaitilingam.com).