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Economic Aspects of the Opioid Crisis

USC Presidential Professor and Nobel laureate Sir Angus Deaton testified before the Joint Economic Committee of the US Congress on economics and the opioid crisis on June 8, 2017.  This post is his prepared remarks.


Editor’s Note: Sir Angus Deaton’s full testimony can be found here.

Thank you, Chairman Tiberi, Ranking Member Heinrich, Vice Chairman Lee, and the members of the committee for holding this hearing on economics and the opioid crisis.

Deaths from legal and illegal drugs are contributing to an almost unprecedented increase in overall mortality among middle-aged white non-Hispanics. A century of mortality decline came to a halt at the end of the 20th century and mortality rates for this group were higher in 2015 than in 1998. Driven by these developments, life expectancy at birth, a key indicator of how well a society is doing, fell for white non-Hispanics from 2013 to 2014, and for the whole population from 2014 to 2015.

Opioids are a big part of this story. Supplies of opioids have stoked and maintained the epidemic. Selling heroin is profitable and illegal. Selling prescription drugs is profitable and legal. Pharmaceutical companies have made billions of dollars in profits on prescription opioids.

Opioids have a legitimate if limited role in treating pain. But perhaps it would have been better had they never been approved; physicians are far from infallible in deciding which patients are likely to become addicted and, once patients are addicted, treatment is difficult and often unsuccessful.

My work with Anne Case has examined opioid deaths as part of an epidemic of mortality; what we call “deaths of despair.” These are suicides, deaths from alcoholic liver disease, and accidental overdoses from legal and illegal drugs. The opioid deaths are the largest component. In 2015, for white non-Hispanic men and women aged 50 to 54 without a college degree—who are much more seriously at risk than those with a college degree—deaths of despair are around 110 per 100,000, of which 50 are accidental overdoses, 30 are suicides, and 30 are from alcoholic liver disease and cirrhosis.

There has recently been a turn-up in mortality from heart disease—after many years of decline—and if obesity is the cause, some of these deaths might be deaths of despair, which would put the total at levels approaching deaths from cancer or from heart disease, the two major killers in midlife.

Figure 1 shows the all-cause mortality rates for white non-Hispanics (WNH) aged 45 to 54, together with mortality rates for selected comparison countries. The mortality rates in midlife in other countries continue to decline at the rates that prevailed in the US before 1998. Americans are killing themselves by drinking, by accidentally overdosing, by overeating or, more quickly, by committing suicide.

Deaths of despair have risen in parallel for men and women, see Figure 2. Such deaths, like all suicides, are lower for women than for men, but the increases have marched in lockstep. The key distinction is not between men and women, but is rather between those with and without a college degree.

Figure 2

Deaths of despair cannot be explained by the economy. They were increasing before the Great Recession, and continued to increase afterwards. We think of all of these deaths as suicides of a kind, and suicides respond more to prolonged economic conditions and to the associated social dysfunctions and loss of meaning in the interconnected worlds of work and family life.

Workers who entered the labor market before the early 70s, even without a college degree, could find good jobs in manufacturing, jobs that came with benefits and on the job training, that could be expected to last, and that brought regular increases in earnings, and a road to middle class prosperity. Not so today. With fewer good jobs, there has been a decline in marriage rates, though couples often cohabit and have children out of wedlock. These cohabiting relationships are less stable than marriages, so that many fathers do not live with their children, and many children have lived with several “fathers” by their early teens.

Heavy drinking, overeating, social isolation, drugs, and suicide are plausible outcomes of these processes that have cumulatively undermined the meaning of life for white working class people.

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