How IPOs Can Kill You

New paper on what happens to people after sudden cash windfalls. Or, as I like to call it, how IPOs can kill you.

The short-term mortality consequences of income receipt

Abstract

Researchers and retailers have documented that consumption declines before the receipt of income, and then rises afterwards. In this paper, we identify a related phenomenon, where mortality rises immediately after income receipt. We find that mortality increases following the arrival of monthly Social Security payments, regular wage payments for military personnel, the 2001 tax rebates, and Alaska Permanent Fund dividend payments. The increase in short-run mortality is large, and occurs for many different causes of death.

Research highlights

We examine whether mortality increases after regular and one-off payments. Short-term mortality patterns suggest deaths rises after income payments. We test whether mortality changes after five different income payments. In each case, mortality increases for about one week after income receipt. In some cases, the increase in mortality is offset by a later reduction in deaths.

You can find an earlier, ungated copy of the paper here.

 

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Comments

  1. thanks for the information as this has great value in the financial sector we should know the consequence before investing in the IPO market thanks for the information.

  2. Bruce Will says:

    Have the authors of this paper considered the possibility that next of kin may be tempted to delay notification of death until after the check arrives?

  3. OregonJon says:

    My personal observation is that the overall conclusion, "We find that mortality increases following
    the arrival of monthly Social Security payments, regular wage payments for military
    personnel, the 2001 tax rebates, and Alaska Permanent Fund dividend payments. The
    increase in short-run mortality is large, potentially eliminating some of the protective
    benefits of additional income," has it exactly backwards. Knowing that cash is on the way there is an incentive for the recipients to stay alive until receipt, then: fini.

    There is little doubt that many people will themselves to stay alive until an expected event occurs. Why would the expected receipt of cash be any different? Cash does not kill, it extends lives by days/weeks/months.