Sunday, March 15, 2009

Costs of Privatizaion: Increased mortality??

An article in a prestigious medical journal (Lancet) presents evidence that:
'Rapid mass privatisation was associated with an increase of 12.8% in mortality rates among men. Possible mechanisms? Rapid social change has been linked to psychological stress, decreased access to and quality of medical care, poverty, unemployment, social inequality, social disorganisation, corruption, and an erosion of social capital. Harmful consumption of alcohol may have been a major cause of increased disease.'
The artile is: 'Mass privatisation and the post-communist mortality crisis: a cross-national analysis' and a summary can be found here.

It came to my attention when receiving the Vox EU weekly digest. A forthcoming article in the (also, prestigious) Economic Journal ('Employment and Wage Effects of Privatization: Evidence from Hungary, Romania, Russia, and Ukraine') using a different methodology claims that there 'is no evidence that privatisation systematically lowered firm-level employment' and so the Lancet result is up in the air as
' is possible that some other link, not suggested by the article and unrelated to employment outcomes, could explain the observed privatisation-mortality correlation at the country level.'
Read the vox eu reply here by one of the authors of the EJ article. A summary of the forthcoming EJ paper is here.
My intuition is that the Lancet article may have a point. Worth checking out both if you have the background and the time!

For IB economics students the possiility of such a link as described above may serve as a possible argument in an evaluation of privatization policies.

(back to grading HP3 - OMG...)

No comments: