Exploring Socionomic Causality Of Social Health And Epidemics
Alan M. Hall
June 16, 2016
Studies have found that changes in benchmark stock market indexes precede corresponding changes in economic performance. Other studies have established a positive association between economic performance and public health. It follows that stock market indexes should be valuable leading indicators of changes in public health. The few studies to have considered this relationship found significant links. We expand the data set to test the historical endurance of the association between stock market performance and public health. First, we find a positive association between U.S. stock market performance and the Index of Social Health from 1970 to 2011. Second, we find a positive and leading relationship between severe or extended declines in stock market indexes and the onset of major epidemics of the 19th, 20th and 21st centuries, including epidemics of cholera, encephalitis lethargica, Spanish Flu, Hong Kong Flu, HIV/AIDS, SARS, H1N1, Ebola and Zika. We explore the socionomic explanation for these associations, specifically that natural fluctuations in social mood regulate changes in both stock price trends and public health trends. Our findings have practical implications for the ability of researchers, practitioners and health officials to anticipate trends in social health and changes in the risk of epidemics for specific locations worldwide.
Exploring Socionomic Causality Of Social Health And Epidemics – Background
While numerous studies have established a positive association between economic performance and public health [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11], links between stock market performance and public health have received less attention.
Stock market performance is generally a leading indicator of economic performance [12, 13, 14]. Since changes in stock market indexes precede changes in the economy, and since changes in the economy precede changes in public health, it follows that changes in stock market indexes would be especially valuable leading indicators for changes in public health.
Bolstering this claim, a small but growing number of researchers have associated declining stock index prices, rising stock market volatility and stock market crashes with subsequent increases in negative public health outcomes. Specific outcomes include increased cigarette smoking, binge drinking and fatal alcohol-related car accidents , greater incidences of stroke , poor well-being [13, 16], increased heart attacks , increased coronary heart disease deaths , poor mental health [12, 19, 20] and increased hospital admissions for psychological conditions  and firearm-related injuries . The consensus among these researchers is that there is a positive association between stock market performance and subsequent public health.
Data for these studies are generally confined to relatively short and recent periods of time. The association between recent stock market performance and public health could be either a historical anomaly or an enduring link. In this paper, we find evidence for the latter conclusion.
We conduct two studies to assess the historical endurance of the association between stock market performance and public health. First, we test a statistical association between stock market performance and social health—a subdomain of public health—in the United States spanning more than four decades. Second, we test a link between severe or extended declines in stock market indexes and a sample of nine major infectious disease epidemics—a relationship that had yet to be examined in the literature—in more than seven countries over a period spanning three centuries. We find a temporal and geographic robustness in the positive association between stock market performance and public health. These results may give researchers, practitioners and health officials more confidence in using stock market indexes to anticipate public health trends, especially as they relate to social health and epidemics.
Some of our results challenge conventional causal explanations for why an association exists between stock market performance and public health. We use socionomic theory to propose an alternative interpretation that pre-dates these conventional explanations and is robust to historical and contemporary findings.
Study 1: Stock Market Performance and Social Health in the U.S.: 1970-2011 Methods
Our first test measures the association between U.S. stock market performance and the Index of Social Health of the United States. Marc Miringoff of Fordham University created the Index of Social Health in 1995 in order to “provide a comprehensive view of the nation’s social health”  (p20). Following Miringoff’s death in 2004, Vassar College’s Institute for Innovation in Social Policy has maintained the index under the direction of Marque-Luisa Miringoff. The index comprises statistics on the following variables: infant mortality, child abuse, child poverty, teenage suicide, teenage drug abuse, high school dropouts, unemployment, weekly wages, health insurance coverage, poverty among people of age 65 and older, out-of-pocket healthcare costs among people of age 65 and older, homicides, alcohol-related traffic fatalities, food insecurity, affordable housing and income inequality . These indicators span all the phases of life—childhood, youth, adulthood and old age—and include both direct health outcomes and variables associated in the literature with direct health outcomes. The index is a recognized measure of social health in the United States [25, 26, 27].
We measure U.S. stock market performance via the annual percentage change in the Dow Jones Industrial Average (Dow), an index comprising 30 large-capitalization firms listed on the New York Stock Exchange. It is a widely-used benchmark of U.S. stock market performance with a history that spans 120 years [22, 12, 28]. We adjust the index for inflation by dividing each yearly average price by the yearly average of the Producer Price Index by Commodity for Finished Goods (PPI). The PPI is maintained by the U.S. Bureau of Labor Statistics and has been validated as a tool to measure inflation [29, 30, 31].
Our study period for this test is 1970-2011, the entirety of the coverage period of the Index of Social Health. We build a two-predictor linear model to account for each year’s Index of Social Health value using the annual percentage change in the inflation-adjusted Dow Jones Industrial Average (Dow/PPI) and the previous year’s value of the Index of Social Health, the latter of which we include to control for potential serial correlation in the data series. This test is essentially a classic evaluation of Granger causality  in which we assess whether values of an independent variable can be used to predict subsequent values of a dependent variable to a degree greater than the predictive efficacy one obtains when using lagged values of the dependent variable alone to predict its own future values.
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