What are the possible effects of the economic crisis and austerity measures on child mortality in the long term?

Responsible researcher: Silvio da Rosa Paula

Article title: CHILD MORBIDITY AND MORTALITY ASSOCIATED WITH ALTERNATIVE POLICY RESPONSES TO THE ECONOMIC CRISIS IN BRAZIL: A NATIONWIDE MICROSIMULATION STUDY

Article authors: Davide Rasella, Sanjay Basu, Thomas Hone, Romulo Paes-Sousa, Carlos Octávio Ocké-Reis and Christopher Millett

Location of intervention: Brazil

Sample size: 5,507 municipalities

Major theme: Economic Policy and Governance

Type of Intervention: Assessment of the impact of the economic crisis and austerity measures on child mortality and hospitalizations
Variable of Main Interest: Mortality of children under 5 years of age; diarrheal diseases and malnutrition

Evaluation method: Microsimulation using the Monte Carlo sampling method and multivariate fixed effects regression

Assessment Context

 The economic crisis in Brazil caused the Gross Domestic Product - GDP to decline -3.8% in 2015, and -3.6% in 2016. In other words, the crisis negatively affected the sum of all goods and services produced in Brazil. country, leading to a rise in unemployment, which mainly affected the low-income population, increasing poverty rates by 2.8% and extreme poverty rates by 3.4%. In other words, the crisis led to an increase in the proportion of people with a monthly income of less than US$43 per month and less than US$21 per month.

In 2016, at the height of the economic crisis, the newly installed government began a series of fiscal austerity measures, the most important of which was Constitutional Amendment 95 – EC95, which began in 2017, abolishing federal spending. minimums with social protection and health, previously established in the 1988 constitution. Furthermore, the EC95 limited the growth of federal spending on social protection and health, to inflation by 20 years following.  

There are few empirical studies on the impacts of economic crises and fiscal austerity measures on health, especially in low- and middle-income countries, with fragile social protection systems and high poverty rates. In this context, there is little understanding of how fiscal austerity measures adopted by the government can affect Sustainable Development (SDG [1] ), it is in this perspective that the importance of this study lies.

Methodology

The study uses the microsimulation technique in discrete time, to predict the impact of economic crisis scenarios and the political response in Brazil, on the mortality rates of children under 5 years of age (U5MR) and hospitalization of children under five years of age. (U5HR) for the period from 2017 to 2030. Microsimulation allows modeling specific characteristics of individuals and the probabilities associated with the occurrence of a given event. These estimates are based on a set of pre-existing data, where the original correlation structure between the variables is used. In other words, abstracting away all statistical complexity, what microsimulation does is predict what would happen in the future, based on what was previously observed.

Intervention Details

To carry out this study, synthetic cohorts were generated for 5,507 municipalities for the period 2010-2030, using as an extension, a pre-existing retrospective cohort for the period 2010-2020, based on a study [2] previously published, which evaluated the effects of the Bolsa Família program on infant mortality. With these synthetic cohorts it was possible to incorporate the real correlation structure between the variables and model the specific parameters of each municipality, and also the changes in the variables over time.

 Based on this information, three scenarios are simulated. Firstly, a milder and shorter economic crisis is considered, with an annual increase of less than 0.55% in the poverty rate, lasting 3 years, from 2015 to 2017. In the second scenario, an economic crisis is simulated, considered medium, with an annual increase in the poverty rate greater than 0.80%, for 5 years, that is, from 2015 to 2019. Finally, in the third scenario, a longer economic crisis is simulated, sustained by 7 years, from 2015 to 2021, with an annual increase in the poverty rate greater than 0.80%.

Within this perspective, specific changes in poverty rates, socioeconomic variables of the municipalities and PBF and ESF coverage are simulated according to each scenario for the years 2010-2030. For the estimations, fixed-effects multivariate regression models were used with information on PBF and ESF coverage, average per capita monthly income, poverty rate (percentage of individuals with a monthly income of less than US$43), illiteracy rate in the population aged 15, fertility rate and percentage of the population living in households with adequate sanitation. The information was obtained from data from the 2010 demographic census, and the values ​​for the years 2011 to 2030 were extrapolated using exponential decay formulas, using specific changes in the municipality over time, from the data set for a previous period.

Results

The results found indicate that infant mortality levels in Brazil would be different in a scenario of fiscal austerity and reduced coverage of poverty alleviation and primary care programs, when compared to the levels existing in 2017. Forecasts show that in a scenario where social protection levels are maintained, the mortality rate of children under 5 years of age would be 8.6% lower in 2030 than in a fiscal austerity scenario, i.e., there would be almost 20,000 deaths avoided in the period 2017-2030.

If social protection levels are maintained, diarrheal diseases would be on average 39.3% lower, and malnutrition would be 35.8% lower in 2030. In addition, there would be 123,000 fewer hospitalizations of children under 5 years of age. In short, the results indicate that the poorest municipalities would be the most affected, ensuring that the high rates of inequalities between municipalities would last until at least 2030. On the other hand, if PBF and FSE coverage rates were maintained, it would be possible reduce inequalities, in line with the Sustainable Development Goals - SDGs.

Public Policy Lessons

In the present study, the authors pay attention to the possible long-term effects of the economic crisis and fiscal austerity measures on mortality and hospitalization rates of children under 5 years of age. It is important to emphasize that the study precedes the pandemic of the disease caused by the new coronavirus (COVID-19).

In short, the study shows the importance of maintaining social program coverage in the face of the economic crisis, which is now also heightened by the pandemic. The task of trying to reduce distortions, which was already difficult before the crisis, now takes on a new dimension, of at least trying to prevent the low-income population from being further harmed, accentuating inequalities, in a country already marked by a high income disparity.

References

RASELLA, Davide et al. Child morbidity and mortality associated with alternative policy responses to the economic crisis in Brazil: A nationwide microsimulation study. PLoS medicine, vol. 15, no. 5, p. e1002570, 2018.

[1] See more information at: https://odsbrasil.gov.br/

[2] See more in: Effect of a conditional cash transfer program on childhood mortality: a nationwide analysis of Brazilian municipalities. Rasella, et al. 2013.