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Wednesday, October 08, 2008 12:43 PM
The newspapers have a chilling front-page story today on an unemployed NRI who shot his wife, mother-in-law and three sons before turning the gun on himself. Karthik Rajaram was wiped out in the stock market crash.
Suicides are not unknown during times of financial distress — think of the farmers of Vidarbha and the stock brokers of New York in 1929.
Some people kill themselves; others die a slow death during recessions and periods of economic trouble. There has been a lot of unusual research by economists on the link between economic health and physical health.
1. Read Chris Dillow here on conflicting research that shows how mortality rates change because of unemployment.
2. And then there is this fascinating paper published by NBER on how babies born in Indonesian villages during years of good rains and crops do better in life than the kids born during bad times.
The link runs from economic circumstances to personal health.
I read an essay this morning by Adam Hanft, where he spins the issue around: can artifically good pychological health cause economic trouble?
Hanft asks a blunt question: did anti-depressants cause the US mortgage crisis?
“We’ve played the blame game with just about everyone else; traders, brokers, ratings agencies, and financial engineers have all done the national perp walk.
But virtually no attention has been paid to whether there was something amiss inside the fevered noggins of those who took on these mortgages, as well as those who created and collateralized them. There are millions of Americans on anti-depressants, and my theory is that many of them might have been medicated into taking on irrational levels of risk.”
What exactly would turn psychotropic drugs like Prozac and Paxil and Zoloft into a subplot in the subprime mess? It’s the biochemistry. Those drugs are SSRIs — selective serotonin re-uptake inhibitors — and they spin their mood magic by elevating levels of serotonin in the brain. And serotonin is a neurotransmitter associated with behaviors that might contribute to the temptation of borrowing $501,000 on a $500,000 house.
When I asked Dr. Helen Fisher, a biological anthropologist who studies brain chemistry, if my hypothesis passes the expert smell test, she replied: “I wouldn’t at all be surprised if people taking drugs that elevate their levels of serotonin — which blunt the emotions — make some dumb financial decisions. Our emotions evolved, at least in part, to help us monitor our actions.”
The implications are vast if millions are truly walking around with a compromised ability to assess risk and perceive threats.