Did the Recession Make You Stupid?

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
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Now is sort of an awkward time to bring this up, but being out of work for a long time is one of the worst things that can happen to you. Your work skills atrophy, and you're more likely to be depressed. Your earning potential falls. Even very basic skills can decline -- one study found that people who lost their jobs did worse on tests of reading and basic math abilities.

That's the bad news. Here's the worse news: Those effects seem to be long-lasting. Income setbacks during a recession can stay with you throughout your career -- for example, studies of people who graduate into a recession show that even decades later, they're not earning as much as people who graduated into sunnier environments. But a new study from Europe seems to show that even cognitive declines are persistent:

People who experience multiple economic recessions in mid-life may be at higher risk of cognitive decline, according to a study published in the Journal of Epidemiology and Community Health.

Men who didn't live through any recession in their mid- to late 40s had an average cognitive score of negative 0.07 at ages 50 to 74, compared with a score of negative 0.12 for those who experienced four or more recessions, according to an analysis of data from 12,000 people in 11 European countries. The research, published today, was led by Anja Leist, a post-doctoral research fellow at the University of Luxembourg.

Cognitive decline may result from lay-offs, enforced part-time work, and the need to take salary cuts and accept lower-status work, according to the authors. The research adds to a separate study that showed that being born during a recession is significantly linked to lower later-life cognitive function.

"Our findings suggest that potentially unanticipated macroeconomic shocks during vulnerable periods in mid-life may affect an individual's potential to accumulate cognitive reserve," the authors said in the paper.

Cognitive function was assessed through tests on verbal fluency, immediate recall, delayed recall, orientation and arithmetic.

Since October 2007, the U.S. labor force participation rate has declined to around 63 percent from about 66 percent. There are 2.4 million fewer people in the workforce than there were six years ago. This is the greatest economic crisis of our time. And we will be living with it for generations.

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To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net