DO STOCK MARKET FLUCTUATIONS AFFECT SUICIDE RATES?

• Author: Tomasz Piotr Wisniewski,Brendan John Lambe,Keshab Shrestha
• Published date: 01 December 2020
• DOI: http://doi.org/10.1111/jfir.12224
• Date: 01 December 2020

The Journal of Financial Research Vol. XLIII, No. 4 Pages 737–765 Winter 2020

DOI: 10.1111/jfir.12224

DO STOCK MARKET FLUCTUATIONS AFFECT SUICIDE RATES?

Tomasz Piotr Wisniewski

The Open University

Brendan John Lambe

Alfaisal University

Keshab Shrestha

Monash University Malaysia

Abstract

In this study, we extend the standard economic model of suicide by considering a

new influential factor driving the voluntary death rate. Using an international

sample, we estimate the model and document a robust and significant inverse

relation between stock market returns and the percentage increase in suicide rates.

Trends in male and female suicide are affected by market fluctuations, both

contemporaneously and at a lag. This predictive quality of stock returns offers the

potential to implement pro‐active suicide prevention strategies for those who could

be affected by the vagaries of the market and general economic downturns.

JEL Classification: G11, I12, I18

I. Introduction

Except for Homo sapiens, no conclusive evidence for suicidal behavior has been

observed elsewhere in the animal kingdom (Preti 2011). The trauma of suicide imposes

a high cost on society, and therefore its prevention is arguably an important policy

goal. To implement effective preventative strategies, we need first to identify and

understand the determinants of suicide. Although there are already empirically

documented rationalizations for the behavior, our model is the first to consider price

movements in the stock market. Previous studies and theories have found an inverse

relation between income and the suicide rate. It is reasonable to assume that a

significant part of an individual’s income in economically developed societies comes

from investment in stock markets. Therefore, one might expect that portfolio value

variations could play a critical role in choosing to end one’s own life.

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This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and

reproduction in any medium, provided the original work is properly cited.

We thank the editor and an anonymous reviewer for their valuable comments and guidance. We have also

benefited from suggestions made by the seminar participants at the Glenfield Hospital in Leicester, The Open

University, University of Derby, and Alfaisal University.

737

© 2020 The Authors. Journal of Financial Research published by Wiley Periodicals LLC on behalf

of The Southern Finance Association and the Southwestern Finance Association

The Bankers’Panic of 1907 sent shockwaves through the market, causing U.S.

stock prices to halve in value from their previous year’s high. Mortality statistics fo r

1908 reflect this, showing that the percentage of deaths attributed to suicide among

bankers, brokers, and company officials was more than twice as high as that of the

general population (Department of Commerce and Labor 1909). Suicides on Wall

Street have become mythologized through the popular press and cinema (Stack and

Bowman 2014). Finance folklore alludes to traders jumping out of windows

following the 1929 crash,

1

although some commentators question the accuracy of

these accounts (Galbraith 1997, p. 128).

2

Despite the controversy, there has been no

rigorous investigation as to whether stock market collapses compel people to take

their own lives. In a society where success is measured in material terms, one might

suppose that a substantial loss in wealth could lead to such a desperate act. However,

this supposition remains untested in the academic literature, and our article attempts

to address this gap.

Suicide represents and creates intense suffering and results in a tragic loss of

life. It is estimated that 788,000 deaths were attributable to suicide in 2015, translating

into 1 death every 40 seconds (World Health Organization [WHO] 2017). The WHO

has identified suicide as a public health priority, tasking its member states with

achieving a 10% reduction in their rates by 2020. If they are to achieve success,

prevention strategies have to address the underlying causes and motivations behind

suicide itself. The purpose of our inquiry is to contribute to the understanding of what

may induce an individual to kill himself or herself. If stock market fluctuations drive

these desperate decisions, policies on mental health need to take into account market

movements and the consequent financial strain.

The literature indicates that there may be a link between financial distress and

the health status of individuals. The findings of Currie and Tekin (2015) tell us that

foreclosures are traumatic events that can induce heart attacks, strokes, and psychiatric

difficulties, as is evidenced by an increased number of hospital visits. Lin et al. (2013)

support this notion by documenting that a fall in house prices is linked to increased use

of medications to treat depression. As economic strain becomes more recognized as a

factor that negatively affects mental well‐being, it is crucial to realize the hazards that

stock price fluctuations present. Exposure stretches beyond those who are directly

invested in equities, as large swathes of the general populace are dependent on pension

funds for their retirement income. Furthermore, stock prices can mirror the general

economic circumstances and the financial standing of employers. As adverse

movements in equity values can be considered a stressor, the question arises as to

whether this may propel individuals to commit suicide.

It is important to note that the stock market index is usually considered a leading

indicator, capable of predicting future macroeconomic trends (Stock and Watson 1989;

Estrella and Mishkin 1998). Thus, if individuals are forward looking, stock returns may be

1

Will Rogers, “Will Rogers says New York Has Had a “Wailing Day,”New York Times (October 25, 1929),

https://www.nytimes.com/1929/10/25/archives/will-rogers-says-new-york-has-had-a-wailing-day.html

2

Bennett Lowenthal, “The Jumpers of ’29,”Washington Post (October 25, 1987), https://www.

washingtonpost.com/archive/opinions/1987/10/25/the-jumpers-of-29/17defff9-f725-43b7-831b-7924ac0a1363/

738 The Journal of Financial Research