Blame Capitalism?

• Author: Henderson, David R.

Deaths of Despair and the Future of Capitalism

By Anne Case and Angus Deaton

312 pp.; Princeton University Press, 2020

In their recent book Deaths of Despair and the Future of Capitalism, Anne Case and Nobel economics prizewinner Angus Deaton, both emeritus economists at Princeton University, show that the death rate for middle-age whites without a college degree bottomed out in 1999 and has risen since. They attribute the increase to drugs, alcohol, and suicide. Their data on deaths are impeccable. They are careful not to attribute the deaths to some of the standard but problematic reasons people might think of, such as increasing inequality, poverty, or a lousy health care system. At the same time, they claim that capitalism, pharmaceutical companies, and expensive health insurance are major contributors to this despair.

The dust jacket of their book states, "Capitalism, which over two centuries lifted countless people out of poverty, is now destroying the lives of blue-collar America." Fortunately, their argument is much more nuanced than the book jacket. But it is also, at times, contradictory. Their discussion of the health care system is particularly interesting both for its insights and for its confusions. In their last chapter, "What to Do?" the authors suggest various policies but, compared to the empirical rigor with which they established the facts about deaths by despair, their proposals are not well worked out. One particularly badly crafted policy is their proposal on the minimum wage.

The data / Case and Deaton start off on the wrong foot by claiming that the median inflation-adjusted wages of American men "have been stagnant for half a century" and that wages for white men without a college degree fell by 13% between 1979 and 2017. In a heavily footnoted book, they did not give a source for those two claims. But they almost certainly used the Consumer Price Index to adjust for inflation. The problem is that the CPI notoriously overstates inflation for that period. If we use the more accurate Personal Consumption Expenditure price index, which itself overstates inflation somewhat, we reach two very different conclusions: (1) wages of American men rose by 25% over that half century, and (2) wages for white men without a college degree, rather than falling by 13% from 1979 to 2017, actually rose by 4.5%. That last number is modest, but it is up, not down.

Case and Deaton get onto stronger ground by discussing what they know a lot about: death rates of Americans by age, gender, color, and presence or absence of a bachelor's degree. Their findings are shocking. They focus on the death rates of white, non-Hispanic men and women aged 45-54, which began falling rapidly around 1970 and reached its bottom in 1999. After that, though, it started to rise. Had the decline continued at its pre-1999 rate, the authors note, the United States would have avoided 600,000 deaths of mid-life Americans. Moreover, they note, mortality of middle-age...