Monday, October 20, 2008

How Does Society React To Economic Crisis?

Link of the day - Sway: The Irresistible Pull of Irrational Behavior

More suicides? Fewer male births? Less back pain? More laxative sales?

Data points litter the landscape as economists, sociologists, psychologists and marketers examine the societal changes, big and small, trivial and traumatic, that accompany a bad economy. And with this particular version of a troubled economy — a stock market that goes into convulsions at 3 p.m., a looming global recession, a $700 billion bailout plan that may or may not work, and a jittery public wondering what is coming next — changes should flow as freely as profits in good times.

It’s one thing to measure changes in society, however, and another to ascribe causes. But if the causal link is elusive, you still might expect to see slack soda sales, more frequent car thefts and meaning-laden tunes at the top of the pop charts during a recession.

Terry F. Pettijohn II, a professor of psychology at Coastal Carolina University, is one of those who sees popular tastes shift with economic conditions. Take beauty, for example. “What we find attractive is not a stable currency,” said Mr. Pettijohn, who has studied how economic and social factors shape preferences in popular music, movie stars and Playboy models. “It’s affected by the environment, by what’s happening in society, and what makes us feel more comfortable in threatening times.”

Looking at Billboard No. 1 songs from 1955 to 2003 for a study to be published in the journal Psychology of Music, he found that in uncertain times, people tend to prefer songs that are longer, slower, with more meaningful themes.

“It’s ‘Bridge Over Troubled Water,’ and ‘That’s What Friends Are For,’ ” he said. “In better times, it’s more likely to be faster, upbeat songs like ‘At the Hop’ or ‘My Sharona.’ ”

The correlation isn’t perfect. The song Mr. Pettijohn’s raters called most meaningless, “Macarena,” was a hit in a relatively bad year.

The Environmental Security Hypothesis that he and his colleagues have been testing, positing that people look for reassurance in worrying times, also helped explain why Playboy magazine’s Playmate of the Year in bad times tended to have a more mature appearance — that is, to be older, heavier, taller and less curvy — than those selected when times were good. Similarly, in a study of American movie stars from 1932 to 1955, he found actresses with mature features — small eyes, large chins, and thin faces — more popular in hard times.

Buying patterns too, can be predicted in economic downturns, according to Leo J. Shapiro, who has tracked consumer behavior since he was a young man in the late 1930s.

“DURING a recession, laxatives go up, because people are under tremendous stress, and holding themselves back,” said Mr. Shapiro, now chief executive of SAGE, a Chicago-based consulting firm. “During a boom, deodorant sales go up, because people are out dancing around. When people have less money, they buy more of the things that have less water in them, things that are not so perishable. Instead of lettuce and steak and fruit, it’s rice and beans and grain and pasta. Except this time the price of pasta’s so high that it’s beans and rice.”

A recent Nielsen report listed tobacco, carbonated drinks and eggs as especially vulnerable to recession, and candy, beer and pasta sauce as recession-proof. On Thursday, Hershey’s announced third-quarter sales and income higher than last year’s. (“We offer a tremendous variety of affordable indulgences, and people love chocolate, even in hard times.” said Kirk Saville, a company spokesman.)

Almost anything can be an economic indicator. Back in the 1920s, the economist George Taylor conceived the hemline index, finding that skirts got longer as the economy slowed. These days, there’s been talk of a haircut index, with short locks signaling a market drop.

The economic downturn could signal significant changes in American life.

“A stunning statistic is that unlike in past epochs, the higher up the income ladder you go, the more hours you work,” said Dalton Conley, a sociology professor at New York University. “More and more, things that used to be outside the marketplace are in the economy. Instead of mom or dad coming home with groceries, they go out, or order in.”

A downturn, then, could result in benefits unmeasured by the market. “If people eat out less, the G.D.P. goes down,” Mr. Conley said, “but nothing in the G.D.P. captures what you gain if you cook and eat in a leisurely way with your kids.”

In a study of coffee growers in Colombia, Grant Miller, who teaches health policy at Stanford’s medical school, found that infant and child mortality rates fell as coffee prices slumped, and concluded that it was because parents had more time to take care of their children.

By most accounts, bad times herald an upturn in at least some crime.

“I’ve never been able to find any relationship between violent crime and the economy,” said Stephen Raphael, an economics professor in the School of Public Policy at the University of California at Berkeley who specializes in urban and labor economics. “But there is a relationship with property crime. Whether it’s burglary, larceny or motor vehicle theft, they all go up with unemployment.”

And already, the market drop has created many personal crises.

“We’ve never had this level of call volume” said Dr. Richard A. Chaifetz, chief executive of ComPsych, the largest provider of employee assistance programs, covering 27 million people. “It’s been going up gradually all year, but then it spiked and we’re up 20, 30 percent since late July. And where relationships and personal psychology issues used to the be the No. 1 reason people called, it’s now financial and legal issues that are No. 1.”

In a typical downturn, young people flock to higher education, especially lower-cost alternatives like community colleges, state universities and trade schools, to bolster their employability. At the same time, parents and students nationwide are agonizing over choices between public schools and private schools and what loans they can afford or even qualify for.

And although Americans have a hard time paying their medical bills and preventive medical care takes a hit in a poor economy, some economists say that there are positive health effects.

“People are physically healthier in times of recession,” said Christopher Ruhm, an economist at the University of North Carolina at Greensboro. “Death rates fall, people smoke less, drink less and exercise more. Traffic fatalities go way down, which is not a surprise when people drive less. Heart attacks go down. Back problems go down. People have more time to prepare healthier meals at home. When the economy weakens, pollution falls.”

This Panglossian view has its limits.

“People are healthier, but they’re not happier,” Mr. Ruhm said. “Suicide rises, and mental health may deteriorate.”

Generally, though, poverty is associated with bad health. And since economic downturns have so many effects, it is often impossible to sort out what mechanism might be responsible for what health result.

Some economists are skeptical of Mr. Ruhm’s findings.

“This is a very complicated area,” said Ralph Catalano, a professor of public health at Berkeley. “If you’re looking at people anticipating economic adversity, worrying about losing their job, some of them will spend less money on alcohol, take fewer risks, do more things that are good for them. So, in some places, the net effect may be fewer people having acute traumatic illness. But if you look at the people who’ve actually lost a job, or lost a business, they are more likely to have adverse health outcomes. When you get to saying there must be fewer people driving, so there must be fewer traffic accidents and cleaner air, that’s what I’d call econometric imagination.”

Mr. Catalano, who found in an earlier study, based on data from Germany, that a bad economy was linked with a decline in male births, cautioned against predicting how this recession would reshape society.

“What we don’t know is what’s going to happen next,” he said. “We don’t know yet how anxious people are going to get, or how many people are going to lose their jobs. The experience we’re going through is unprecedented. The last time we had this kind of experience was in the 1930s, and we didn’t have data.”

Mr. Conley, too, harked back to the Great Depression in suggesting that the current downturn could lead to a more equal America, if the richest people suffer the greatest economic losses.

“Nineteen twenty-nine was the peak of inequality,” he said. “It’s almost like things get too top-heavy, and they topple over.”

Credit Crunch Is A Boon For Cookbook Publishers

Easing Death's Sting While Turning A Profit

Geneticist says evolution may be near its end