The social impact of the downturn

Belatedly caught up with an article on the likely social impact of the recession by Tyler Cowen, a professor of economics at George Mason University, in last Sunday’s New York Times. Among other things he predicts:

• A return to less expensive activities: “They may take the form of greater interest in free content on the Internet and the simple pleasures of a daily walk, instead of expensive vacations and NBA [National Basketball Association] box seats.”

• A larger than usual decline in consumption by the wealthy. Although the poor will suffer the most pain the rich have suffered a sharp decline in labour incomes owing to the problems in the financial sector. This is on top of the impact of declining asset prices.

• Popular culture catering to the wealthy, such as fancy restaurants, could decline.

• More mental health problems although paradoxically physical health could, on average, improve. On the latter accidents could decline as people make fewer trips while spending on alcohol and tobacco could also fall.

• Finally, a more “prudent” and risk averse climate could take hold.

I would not concur with all of Cowen’s predictions but the subject is worth considering.