5 States Where Pandemic Stress Could Hurt CEOs' Health

Four economists have come up with a paper that could make life insurance company executives' nightmares worse: a look at what severe economic stress does to a corporate CEO's lifespan, and face. The economists analyzed the impact of the 2007-2008 Great Recession and corporate takeovers, not the COVID-19 pandemic, but the analytical techniques used in the paper could, eventually, shape how actuaries assess the effect of pandemic-related stress on how long insureds will live. The economists found that:

• The Great Recession had the mortality effect of increasing a typical CEO's age by about 1.5 years.
• Anti-takeover laws had the mortality effect of decreasing a typical affected CEO's age by about 2 years.
• The Great Recession made an affected CEO look an average of 1.2 years older, based on assessments by computers equipped with age-estimation software.

The economists — Mark Borgschulte, Marius Guenzel, Canyao Liu and Ulrike Malmendier — have posted a working paper version of their paper, behind a paywall, on the website of the National Bureau of Economic Research. A working paper is a paper that has not yet gone through a full, formal academic peer review process.

The Methods

The economists say they used CEO mortality and appearance data to analyze the effects of job demands and work-related stress on people's health. One obstacle to analyzing the effects of work stress on health is that, for most people, separating the effects of work-related stress and financial hardship could be difficult, the economists say. They say using data for CEOs at large, publicly traded companies helps eliminate the effects of serious financial hardship from the study, because most CEOs are so well-paid that pay cuts or job loss would have little effect on their physical well-being. The economists created a database containing the exact dates of birth and death of 1,600 CEOs who were appointed before anti-takeover laws took effect. They then used statistical techniques to analyze the possible effects of anti-takeover laws, and the Great Recession, on the CEOs' life expectancy. They then used machine learning techniques developed by G. Antipov to analyze photos of the CEOs' faces and come up with CEO age estimates.

Interpretation Details

Rough, unadjusted analyses showed that some of the effects of long-lasting calmers and stressors had a bigger effect at different points in time after the calming force or stressor force began. Anti-takeover laws, for example, increased a CEO's life expectancy by about 9% per year in the first years that the laws were in force, but the effect wore off by the fifth year, the economists found. The economists say that, overall, they believe the effects they found were large. The economists say they believe the effect of anti-takeover laws and the Great Recession on a CEO's life expectancy was bigger than the effect of smoking until age 30 and then quitting.

The Pandemic

The Census Bureau is collecting large amounts of COVID-19 pandemic impact stress data from owners of small businesses through its Small Business Pulse Survey program. Life insurers and others could use the data to come up with estimates of the owners' stress levels. One possible stress indicator is how an owner answers the survey question, "Overall, how has this business been affected by the coronavirus pandemic?" In the week ending March 14, for example, 28% of owners said the pandemic has had a large negative effect. At the state level, the percentage of owners who said the pandemic has had a large, negative effect ranged from 13%, in Idaho, up to about 38% in one state. For a look at the five states with the highest percentage of small business owners reporting a large, negative effect — and, possibly, indicating the kind of life-shortening stress experienced by the public company CEOs in the Borgschulte paper — see the slideshow above. (Image: n_defender/Shutterstock)