The Financial Crisis and Public Health: Hidden Opportunities for Prevention?

In this commentary, CHW founder and director Nicholas Freudenberg examines how the current financial crisis may influence corporate health practices and asks whether the crisis may present the public health community with new opportunities to advance healthier policies and to restore a more just balance between markets and government.


In the last few months, the financial industry has suffered catastrophic losses, leading to a federal bailout of more than $700 billion, the collapse of leading financial companies like Bear Stearns, Lehman Brothers, Countrywide Financial and nineteen banks, and the largest drop in quarterly consumer spending in more than 25 years.  In this commentary, I examine the impact of the current financial crisis on corporate decisions that influence health. I also ask whether this crisis, as well as hurting people, provides hidden opportunities for advancing public health.

To answer this question, I begin by looking at the connections between the financial sector that provides banking, investment, insurance, mortgage and lending services and the consumer sectors that CHW monitors: food, alcohol, tobacco, guns, automobiles and pharmaceuticals. I then consider how the financial crisis may influence the decisions these consumer companies make on product design, marketing, retail distribution and pricing and in turn the impact of these decisions on population health.  Finally, I propose strategies and policies that the public health community can advance to better protect population health during this economic crisis.  My broader goal it to encourage a robust debate on these issues within public health. In many cases, I ask questions rather than provide answers.  CHW readers are invited to respond with comments for posting.


The financial sector (sometimes know as FIRE for Financial, Insurance and Real Estate) and the consumer products sector (labeled here as FATGAP, an acronym for food, alcohol, tobacco, guns, automobiles and pharmaceuticals, six industries that play a major role in current patterns of global mortality and morbidity), are intimately linked as the following stories illustrate.

  • Pilgrim’s Pride, the world’s largest chicken company, had a third quarter 2008 loss of $53 million, laid off more than 2,000 workers and shut production facilities a around the South.  In September, the companies stock plunged 38% in one day based on rumors of financial difficulties. The acute problem of rising interest rates, together with the rising cost of corn and declining price of chicken breast due to a world glut, have made it hard for Pilgrim to turn a profit.  Now Lonnie “Bo” Pilgrim, the owner of the poultry empire is having to consider bankruptcy or sales of major assets. As bad loans eat up their reserves, bankers get tougher about lending  so Pilgrim may not be able to find a lifeline.1
  • General Motors, the world’s largest automobile company, is beseeching Congress and the new Obama Administration-elect, for a multi-billion dollar loan as falling car and truck sales deplete its cash reserves and investors shun its stock. Since auto sales depend heavily on car loans, the financial crisis-induced credit crunch, together with consumer doubts about the economy, led to a 2008 third quarter drop of 25.6% in auto sales.2 Many observers predict that General Motors or another Big Three automaker may go bankrupt within weeks.

As these stories show, to grow, the consumer products sector demands capital for two purposes: to finance the investment needed to develop new products and markets and to allow consumers to finance (through loans, mortgages, credit cards, etc.) their purchases and to maintain a consuming lifestyle.  The current financial crisis threatens FATGAP companies from both ends, since lenders have less to lend to producers and consumers and are less willing to take the risks they might have embraced only a few months ago.  This dynamic creates a downward cycle, as lenders turn companies down for loans, consumers buy less and companies fire workers.  As these workers lose their jobs, houses or health care coverage, they spend even less, further reducing corporate revenues.


So how does the combination of falling demand, less access to capital and declining investor and consumer confidence affect how FATGAP companies make decisions, especially the decisions that influence health? Again, a few stories show how these factors—together with fluctuating prices for commodities like corn and oil—change how companies design, market, distribute and price their products.

Ford, GM and Chrysler hope that more fuel-efficient cars will entice back into their showrooms consumers who in recent months have abandoned previously best selling but gas guzzling SUVs and trucks. Auto executives have also found that green promises can help to extract cash from Congress. A few months ago Congress approved $25 billion in low interest loans to help car companies make more fuel-efficient cars but as noted the industry now claims it needs another infusion of tax payer cash if it is to survive.2

Negotiating a deal that will help the auto industry to survive, maintain decent jobs and produce more energy efficient cars as well as mass transit vehicles is an agenda long pursued by the Apollo Alliance, a coalition of environmental, labor, business and community groups that advocates for clean energy, mass transit and sustainable economic growth. Whether the financial crisis, the threat of bankruptcy and the request for a bailout can persuade the auto industry to bargain more seriously than in the past remains to be seen.

The financial crisis is also changing consumer behavior, which in turn influences how companies market their products. For example, in May 2008, the market research firm Information Resources found that 53% of the respondents to their survey said they were cooking at home more than just six months ago, a response in part to the rising cost of food.3 To counter the threat of people cooking more or saving by eating out less, YUM Brands, the corporate owner of KFC and other fast food chains, has launched a new advertising campaign that urges customers to take “the KFC $10 challenge” trying to cook at home for less than the $9.99 a KFC Family Value meal costs.4 Peter Fould, KFC’s vice-president for advertising observed that the campaign “put a positive spin on our brand attributes.” Only a few years ago, KFC ads were touting the health rather than the cost attributes of their brand, showing a TV spot that featured a woman putting a bucket of KFC fried chicken down in front of her husband and announcing, “Remember how we talked about eating better? Well, it starts today!” The Federal Trade Commission found that KFC made a false claim in that ad and forced the Colonel to pull the ad.5

Some food advocates have argued that higher food prices could induce healthier diets, encouraging people to choose quality over quantity.6 The financial crisis makes that outcome less likely on two fronts. First, the economic downturn has at least for the time being halted the rise in basic food prices—by October, Pilgrim Chicken was paying only $5 a bushel of corn, down from $8 a bushel in June, a ray of hope for both Pilgrim and KFC.  At the same time, as people lose jobs and homes, their willingness to pay higher prices for food is likely to diminish.

As the new KFC ad suggests, all those health claims that food companies have made in the last few years may be replaced by ads that feature price. And since food companies can sell highly processed, high fat, sugar and sodium products at a lower cost per calorie cost than healthier food and make more profit,7 the economic climate suggests that unhealthy food will continue to be marketed more heavily than healthier products.


More broadly, the current financial crisis provides new evidence to inform the public health debate about the influence of the economy on health. To date, public health researchers have had contradictory assessments of the health impact of economic downturns. The dominant body of literature shows that economic contraction, job loss and increasing poverty contribute to higher rates of illness and death due to higher exposure to more stressors, decreased social cohesion, less access to the necessities of life and more limited access to health care.8, 9, 10 A recent twin study conducted in Denmark, for example, found that individuals born in a recession were at higher risk for health problems later in life and had a shorter life span than those born in a more favorable economy.11

On the other hand, some researchers claim that recessions can promote health. Christopher Ruhm, an economist at the University of North Carolina in Greensboro, found that death rates dropped in the economic recessions of 1974 and 1982 and increased during the recovery in the 1980s.12 More recently, he has argued that a healthy economy can “break your heart,” showing that decreases in unemployment are associated with increases in deaths from coronary heart disease.13

It seems unlikely that as complex an event as an economic recession or depression would have a single and consistent health effect. More likely, the impact varies by place and time, demanding that researchers investigate these contextual effects.  In addition, it seems likely that economic downturns would have different effects on the better off and the poor, contributing to health disparities as they unfold.

For the most part, researchers on the economic impact of business cycles have not considered corporate practices as a variable of interest.14 Rather they have focused on the health effects of more macrolevel forces like employment, income and social stressors. What might be the benefits of considering recession-related changes in business practices as a social determinant of health? Can a focus on marketing, product design or retailing yield insights that can guide policies to prevent disease? For example, if some people consume more alcohol during hard times,15 as some evidence suggests, and alcohol producers target their marketing to this population,16 as other evidence suggests, might economic contractions be a good time to raise alcohol taxes to prevent alcohol-related disease or to insist on stronger public oversight of deceptive or misleading alcohol advertising claims?

If declining economies precipitate risk behavior, can health education counter-advertising campaigns “immunize” consumers against marketing that plays on economic insecurity? A recent survey by the American Psychological Association found money and the economy were the highest ranked stressors for 80% of those surveyed and almost half said they coped with stress by eating too much or unhealthy food. Almost one-fifth (18%) of Americans report drinking alcohol to manage their stress and 16 percent report smoking.17 An economy that provokes higher levels of stress may also precipitate higher rates of chronic disease like cancer, diabetes, heart disease and stroke.

Chronic diseases could be further worsened by the intersection of a bad economy and pharmaceutical industry pricing practices that insist on exorbitant rates of return. In October, Pfizer announced that in the third quarter sales of Lipitor, the world’s top selling prescription medication were down 13%.18 Dr. James King, chair of the American Academy of Family Physicians, told the New York Times, “People are having to choose between gas, meals and medication. I’ve seen patients who have stopped taking their Lipitor because they can’t afford it.”

On the other hand, the economic crisis may also encourage some companies to produce new and healthier products. In 2007, world bicycle production increased by almost 4%, a development that could reduce air pollution, obesity and sedentary behavior.19 Will the crisis in the automobile industry lead some companies to produce bicycles and subway cars instead of SUVs and pickups? Should that be a condition of government bailouts? Are there other public policies that could support this transition? To give another example, public health and nutrition experts are now promoting the potato as a solution to rising grain prices and growing world hunger. “Increasingly, the potato is being seen as a vital food-security crop and a substitute for costly grain imports,” NeBambi Lutaladio, an expert on roots and tubers at theUnited Nations Food and Agriculture Organization in Rome recently told the New York Times.20 “Potato consumption is expanding strongly in developing countries, where potato is an increasingly important source of food, employment and income.” Potatoes contribute to local and regional farm economies are less profitable for global trade and multinational corporations. Should the next Farm Bill subsidize potatoes instead of corn? By using the economic crisis to make transitions from less to more healthy and sustainable products, government and companies could contribute to health.


In the short run, the current economic crisis will severely damage the health of the public. Its burdens will fall most heavily on poor people, African Americans, Latinos, recent immigrants and other vulnerable populations. It will exacerbate existing disparities in health, deprive governments of resources needed to protect well-being and may undermine the social cohesion that supports health.

But the fact that its overall consequences are harmful and the result of reckless, incompetent and self-serving decisions by bankers, corporate executives and elected officials does not relieve public health researchers and advocates of asking whether we can advance our goals in this period.

In my view, the current economic climate provides new opportunities to challenge three fundamental causes of ill health: the conviction that the solution to all economic problems is more consumption; the unwillingness to consider the sustainability of current lifestyles; and the unchallenged assumption that corporations and markets are the ultimate deciders in our society. Together these beliefs are at the root of our most serious health and social problems and any opportunity to reconsider them promises new hope for improved well-being.

For the last eight years, the Bush Administration’s solution to all social and economic problems was for government to cut taxes and individuals to go shopping. Many observers across the political spectrum still believe that only increased consumption can solve the current crisis and the goal of public policy ought to be, once again, to persuade people to shop more. But as Nobel Prize- winning Columbia economist Joseph Stiglitz has observed, “America’s problem today is not that households consume too little; on the contrary, with a savings rate barely above zero, it is clear we consume too much.”21Stiglitz rejects public policies that encourage our spendthrift ways, arguing instead for social investment on such tasks as rebuilding our infrastructure or investing in education and health care.

Public health professionals should oppose policies that encourage increased consumption as a solution in itself, since it is current patterns of consumption that have contributed to our burdens of chronic disease, cancer, accidents and injuries, i.e., the major causes of morbidity, mortality and disparities in the United States today. By advocating for stronger and more effective public oversight of the corporate practices that encourage unhealthy consumption,22 public health professionals can contribute to a re-examination of the proper role for government. As failing companies in both the FIRE and FATGAP sectors turn to the government for handouts, a reasonable quid pro quo is for them to give up practices that impose health and financial hardships on their consumers and lenders, the tax payers of America.

A second goal is to raise the issue of sustainability. Not only do current patterns of consumption contribute to ill health, they also worsen climate change, deplete natural resources and increase inequalities between developed and developing nations. Public health researchers and advocates can link the health and environmental consequences of economic policies that leave so many decisions to unregulated markets. In a speech on Wall Street in November, President George Bush told business leaders “Free-market capitalism is far more than an economic theory. It is the engine of social mobility, the highway to the American dream.”23 For many in the world, however, this American dream has become their nightmare, contributing to gyrating commodity prices; declining wages; higher unemployment ; growing economic, health and educational disparities and the threat of continuing environmental disasters. By joining in the development of more sustainable and equitable alternatives to Bush’s dream, as the constituencies who created the World Social Forum and other alternative groups have done, the public health community can contribute to making sustainability a criterion for judging policy proposals.

Finally, the economic crisis provides an opportunity to reconsider the role of government. John Dewey once said that “Politics is the shadow cast on society by big business”. By reducing the umbra of that shadow, we promote democracy. If our government can within a few weeks find $700 billion to rescue our financial system, why can’t it show the same urgency towards developing a more equitable, health enhancing and effective health care system or food system or transportation system? The financial crisis has given regulation a new face and a new imperative. If legislators and the American public can support stronger regulation to protect people against irresponsible lending and banking practices, why can’t government also take on pharmaceutical companies that sell inadequately tested medicines, food companies that promote unhealthy food to children and automobile companies that refuse to make safer and less polluting cars?

If allowing corporations to dominate our political system has contributed to the foreclosure and credit crises, corrupted so many of our elected officials, and weakened our regulatory system, can’t we reconsider whether what George Soros has called market fundamentalism is sound economic and political policy? By joining the growing public efforts to level the political playing field through reforms of campaign finance, lobbying, revolving door policies, and protection of commercial speech, public health professionals can contribute to an environment in which our voices and the voices of our constituents are more likely to be heard and to make a difference.

In sum, the current economic crisis will have profound effects on our political and economic systems, on how corporations make decisions, on the relationship between markets and government and on the well-being of the world’s population. By finding new ways to advance the public health agenda in this climate, researchers and advocates can extract some gains during this difficult period.

Nicholas Freudenberg is Founder and Director of Corporations and Health Watch and Distinguished Professor of Public Health at Hunter College City University of New York.



1 Etter L, Mccracken J. Debt woes, feed costs come home to roost at Pilgrim’s Pride. Wall Street Journal, October 21,2008, pp.16-17.

2 Vlasic B. GM seeks bailout. New York Times, November 8, 2008, p. 1 and 20.

3 Tierney J.A Gift from the 70s: energy lessons. New York Times, October 7, 2008, pp. D1 and D3.

4 Elliott S. An old buzzword is back: bargaining. New York Times. October 24, 2008, p. B7.

5 Food and Drug Administration Press Release. KFC’s Claims That Fried Chicken Is a Way to “Eat Better” Don’t Fly , June 3, 2004. Available at

6 Pollan M. In Defense of Food: An Eater’s Manifesto. New York, Penguin, 2008.

7 Monsivais P, Drewnowski A. The rising cost of low-energy-density foods. J Am Diet Assoc. 2007;107(12):2071-6.

8 Brenner MH. Commentary: economic growth is the basis of mortality rate decline in the 20th century–experience of the United States 1901-2000. Int J Epidemiol. 2005;34(6):1214-21.

9 Granados JA. Macroeconomic fluctuations and mortality in postwar Japan. Demography. 2008;45(2):323-43.

10 Walberg P, McKee M, Shkolnikov V, Chenet L, Leon DA. Economic change, crime, and mortality crisis in Russia: regional analysis.BMJ. 1998; 317(7154):312-8.

11 van den Berg GJ, Doblhammer-Reiter G, Christensen K. Being Born Under Adverse Economic Conditions Leads to a Higher Cardiovascular Mortality Rate Later in Life: Evidence Based on Individuals Born at Different Stages of the Business Cycle. IZA Discussion Paper No. 3635, Bonn: August 2008. Available at

12 Ruhm CJ. Are Recessions Good for Your Health? Quarterly Journal of Economics, 2000; 115(2): 617-650

13 Ruhm CJ. A healthy economy can break your heart. Demography. 2007 Nov;44(4):829-48.

14 Waitzkin H. Political economic systems and the health of populations: Historial thoughts and current directions.  in Galea, S. editor, Macrosocial Determinants of Popuyl;ation Health. New York: Springer, 2007, pp 105-138.

15 Mossakowski KN. Is the duration of poverty and unemployment a risk factor for heavy drinking? Soc Sci Med. 2008;67(6):947-55.

16 Foster SE, Vaughan RD, Foster WH, Califano JA Jr. Estimate of the commercial value of underage drinking and adult abusive and dependent drinking to the alcohol industry.Arch Pediatr Adolesc Med. 2006;160(5):473-8.

17 American Psychological Association. Stress in America. October 8, 2008. Available at

18 Saul S. In sour economy, some scale back on medications New York Times, October 12, 2008.p. B1.

19 Gardner G. Bicycle Production Reaches 130 Million Units. World Watch Institute, November 12, 2008. Available at:

20 Rosenthal E. To Counter Problems of Food Aid, Try Spuds. New York Times, October 25, 2008. Available at:

21 Stiglitz J. Reversal of fortune. Vanity Fair, November 2008. Available at

22 Freudenberg N, Galea S. The impact of corporate practices on health: implications for health policy.J Public Health Policy. 2008;29(1):86-104.

23 Stolberg S, Pear R. Bush speaks in defense of markets. New York Times, November 14, 2008, p. B1.


Photo Credits:

1. wireheadinc
2. avlxyz
3. bagpus