Suicides as a response to adverse market sentiment (1980-2016).

Pankaj Agrrawal,Daniel H Sandweiss,Doug Waggle,Takeru Abe

doi:10.1371/journal.pone.0186913

Pankaj Agrrawal, Daniel H Sandweiss + Show 2 more

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https://doi.org/10.1371/journal.pone.0186913

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Journal: PloS one	Publication Date: Nov 2, 2017
Citations: 24	License type: CC BY 4.0

Affiliation: University of Maine, University of West Florida

Abstract

Financial crises inflict significant human as well as economic hardship. This paper focuses on the human fallout of capital market stress. Financial stress-induced behavioral changes can manifest in higher suicide and murder-suicide rates. We find that these rates also correlate with the Gross Domestic Product (GDP) growth rate (negatively associated; a -0.25% drop [in the rate of change in annual suicides for a +1% change in the independent variable]), unemployment rate (positive link; 0.298% increase), inflation rate (positive link; 0.169% increase in suicide rate levels) and stock market returns adjusted for the risk-free T-Bill rate (negative link; -0.047% drop). Suicides tend to rise during periods of economic turmoil, such as the recent Great Recession of 2008. An analysis of Centers for Disease Control and Prevention (CDC) data of more than 2 million non-natural deaths in the US since 1980 reveals a positive correlation with unemployment levels. We find that suicides and murder-suicides associated with adverse market sentiment lag the initial stressor by up to two years, thus opening a policy window for government/public health intervention to reduce these negative outcomes. Both our models explain about 73 to 76% of the variance in suicide rates and rate of change in suicide rates, and deploy a total of four widely available independent variables (lagged and/or transformed). The results are invariant to the inclusion/exclusion of 2008 data over the 1980–2016 time series, the period of our study. The disconnect between rational decision making, induced by cognitive dissonance and severe financial stress can lead to suboptimal outcomes, not only in the area of investing, but in a direct loss of human capital. No economic system can afford such losses. Finance journal articles focus on monetary alpha, which is the return on a portfolio in excess of the benchmark; we think it is important to be aware of the loss of human capital as a consequence of market instability. This study makes one such an attempt.

Highlights

The negative consequences of economic recessions and depressions include fatal violence, both suicides and homicides
We explored the relation of suicide, homicide, and murder-suicide with the financial crisis triggered by the collapse of the housing market during the Great Recession of 2008 [1]
We investigated the occurrence of suicide, homicide, and murder-suicide as the final breakdown of an individual facing adversity resulting from foreclosures, mortgage delinquencies, evictions, and other financial hardships associated with the global financial crisis (GFC)

Summary

Introduction

The negative consequences of economic recessions and depressions include fatal violence, both suicides and homicides. We test the hypotheses that the global financial crisis (GFC) and the associated adverse economic sentiment, triggered by the collapse of the housing market in 2008, would increase suicide, homicide, and murder-suicide rates.

Results

Conclusion