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The Economy and You

The Economy and YouAssistant Professor of Economics Andreea Balan Cohen weighs in on how the current economic downturn will affect the average American's health.

Medford/Somerville, Mass. [07.01.08] As the United States' economy continues its downward trend Tufts Assistant Professor of Economics Andreea Balan Cohen says that the average American can expect both positive and negative effects to their health.

With gas prices now clearing the $4-per-gallon mark, people will spend less behind the wheel, Cohen says. "Increases in the price of oil can increase health by reducing the time spent driving, and thus increasing exercise-walking-and reducing the stress associated with long commutes [as people choose to move closer to their offices]."

Economic downturns can also translate into lower rates of obesity, according to Cohen. "In difficult economic times, people tend to eat less and obesity rates go down, or at least stop rising," Cohen says.

"With rising unemployment, people might have more time for health-improving lifestyle changes," she says. "According to new research in the Journal of the American Medical Association, after many years of rapid increase, child obesity in the U.S. has finally stopped growing. We can only hope that improvements in other health-related behavior will follow as well."

On the downside, Cohen says state budgets may suffer as unemployment rates increase. As a result, the number of uninsured people may increase.

"The Kaiser Foundation predicts that a 1 percentage point rise in the national unemployment rate would increase the enrollment in Medicaid and the State Children's Health Insurance Program (SCHIP) by 600,000 children and 400,000 non-elderly adults," she says. "The rise in the number of uninsured and the increased enrollment in SCHIP and Medicaid would in turn put a greater strain on state budgets with an estimated increase in costs of $3.4 billion."

Pressures to maintain balanced budgets - as mandated by law in most states - may require tax hikes, increased federal transfers and cuts in Medicaid and SCHIP, as well as reductions in K-12 and higher education funding.

"The potential harmful effect of these policies on the program beneficiaries would be significant," says Cohen. "The lack of access to health insurance, for instance, would adversely affect health, and would even further increase state and local uncompensated care costs," Cohen says.

She adds that, "tax increases and health and education funding cuts, could potentially exacerbate the harmful effects of the business cycle, resulting in even fewer jobs, and an even worse downturn, and thus, in vicious cycle, even worse health."

Cohen is a new member of the Department of Economics faculty, arriving last fall. Her main area of study is health economics. Cohen's recent research includes analyses of welfare programs for the elderly and the impact of parental alcohol consumption on children's health.

Profile by Kaitlin Melanson, Web Communications

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