Economic woes can be as damaging to a baby’s health as smoking or drinking during pregnancy, according to the first study to establish a causal link between foetal exposure to financial stress in an advanced economy and the health of babies at birth.
Research presented at this month’s annual congress of the European Economic Association in Mannheim by Arna Vardardottir, assistant professor at the department of economics at Copenhagen Business School, tracks the unexpected collapse of Iceland’s economy in 2008.
After studying the weight of newborn children in Iceland’s national birth register, Vardardottir found that babies who had been in their first trimester during the crisis were born 120g lighter than the average. They were also 3.5% more likely to have a low birth weight (less than 2.5kg) than average and were generally more likely to suffer from neonatal diseases.
Vardardottir said her results showed that financial stress had an impact similar to those of the two most widely cited behavioural issues during pregnancy: smoking and drinking. “My results show that a sudden deterioration in economic conditions has a negative impact on birth outcomes and that children in the early stages of gestation are more vulnerable to such shocks,” she said.
“The findings suggest large losses from financial distress that have previously been ignored: children with worse health at birth can expect to earn substantially less over their lifetime, and low-income families are more likely to experience financial stress.”
The relationship between fertility and the economy is becoming a major focus for demographers. A net exodus from Spain as a result of its faltering economy has left the country with one of the EU’s lowest fertility rates, while Portugal’s population has been shrinking since 2010.
Vardardottir’s work brings a fresh perspective to the relationship by shining light on one of the more dramatic crises in recent economic history. While Iceland’s difficulties were similar to those experienced by many financial institutions and countries worldwide, the scale of its collapse, its speed and the fact that it had not been foreseen meant its impact was particularly acute.
Vardardottir believes that her work examining what she describes as “in utero exposure to deteriorated economic conditions” will lead to a greater understanding of the long-term costs of financial catastrophes in advanced economies and highlight how babies born to the poorest families will be affected disproportionately.
“The results imply large welfare losses from financial distress that have hitherto been ignored because children with worse health at birth can expect substantially lower lifetime earnings,” she said. “They suggest that economic hardships may in general exacerbate income inequalities in the long run, since low-income households are typically more exposed to financial stress.”
