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Silver Lining in Recessions - 9/7/16

Not much good can be said about recessions.  People lose jobs in large numbers, unemployment tilts higher, nest eggs get smaller, and bills become more difficult to pay.  But two economists, Clifford Winston at the Brookings Institution and Vikram Maheshri, an economist at the University of Houston, have identified a silver lining. 

Their study found that auto fatalities in Ohio decline by fourteen percent for each one percent increase in the jobless rate.  If one presumes that this pattern is repeated nationally, it means that a one percent increase in unemployment could reduce the national auto fatality rate such that five thousand lives are saved per year. 

As reported by Bloomberg, the data originate from customers of State Farm in Ohio who agreed to have their travel electronically recorded in exchange for a reduction in their insurance rates.  The period covered was from August two thousand and nine, when the national recession was technically over but joblessness remained elevated through September twenty thirteen. 

Other studies have found that people generally drive less during economic downturns, but the new study indicates that the largest decline in driving occurs among the worst drivers when unemployment rises.   

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.