How a Lousy Economy Can Make You Sick

As the stock market hovers around all-time highs and fears over some kind of reversal intensify, financial advisors who hedge against potential losses may be protecting their clients' health as well as their wealth.

That is one conclusion that could be drawn from a rash of new studies linking recession, stock market crashes and volatility to an increase in anxiety, migraines and ulcers, and even hospital admissions.

One of the studies, conducted by a team at San Diego State University led by epidemiologist John Ayers and published in the February issue of the American Journal of Preventive Medicine, took a novel, big-data approach to identifying health changes during the Great Recession.

Instead of relying on after-the-fact health surveys, the researchers looked at Internet search queries, seen as offering immediate and precise descriptions of symptoms.

The researchers compared the cumulative difference between queries (e.g., "stomach ulcer symptoms" or "back pain relief") observed and expected based on trends prior to the study period of December 2008 through 2011.

For the 100 most frequently queried symptoms, the Great Recession produced 205 million health concern queries beyond prerecession trend expectations.

The top maladies, thematically, involved headache, hernia, chest pain and arrhythmia, which generated, respectively, 41%, 37%, 35% and 32% more queries than expected.

More specifically, however, stomach ulcer symptoms and headache symptoms saw recession-era increases of 228% and 193%.

Overall, the study tentatively associates the Great Recession with "worsening population health."

A closely related, though entirely independent study by finance professors Joseph Engelberg and Christopher Parsons, both of U.C. San Diego, shows that sharp stock market drops are positively linked to immediate spikes in hospital admissions.

Interestingly, mental health maladies such as anxiety, panic disorder and depression were the most pervasive conditions leading to hospitalization. (As for physical ill effects, the researchers found they were most prevalent amidst stock reversals of local companies, suggesting concerns related to jobs and income.)

"Virtually the entire effect shows up the first day (as with the October 1987 crash), with a magnitude roughly twice that observed for non-psychological disorders," which may result in hospital admission the following day, the authors find. "A daily return in the bottom quintile increases hospital admissions by 0.63% over the next two days," they estimate.

Most people suffering from anxiety, of course, don't end up in a hospital. But looking at these most severe cases and applying back-of-the-envelope calculations, the authors extrapolate from their California-centered 30-year study that — nationally — stock market declines increase health care costs by roughly $650 million annually, looking at hospitalization costs and population data.

The researchers suggest further study of the financial media's effect on the health of the population, noting the "widespread dissemination of financial information, on an almost minute-to-minute basis" may heighten the distress of those experiencing market losses because of anticipatory emotions.

Anticipatory emotions involving stock market anxiety were, coincidentally, the subject of a survey of 128 advisors by Hartford Funds, which found that client anxiety about investment losses results in their prioritizing low risk over the potential for greater return.

The survey lends further support to the classic equity premium puzzle, which explains investors' allegiance to lower-return bonds as a result of inordinate fear of stock losses.

A majority of advisors, 57%, say client anxiety of this nature has adversely affected their investment decisions.

Emerging-market funds especially induce anxiety, say 90% of surveyed advisors, with 65% citing international bond funds.

In contrast, equity value funds and corporate bond funds produced the least amount of stress, advisors say of their clients.

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