Die For The Dow? What The Data Really Says

Posted: May 22, 2020 10:03 AM
Die For The Dow? What The Data Really Says

Source: AP Photo/John Locher

Recently Joe Biden took the next major campaign theme out for a test drive. Let's call it 'Die for the Dow'. 

This is great agit-prop. What decent human being would not choose a human life over a rising stock market? But like most of the really great propaganda, it contains a slight of hand, an unsound assumption which is used to frame the issue in such a way as to lead to an unsound, but politically advantageous, conclusion. That assumption is that market value and human life are in conflict with one another. Once you sneak that in through the back door, anyone with any humanity is forced to let unlimited government suppression of economic activity in through the front door, because after all, human life is more important that stock markets.

The problem is that the data overwhelmingly show that markets tend to be more valuable where people live longer, or is it that people live longer where markets are more valuable? Or is it that societies with certain values and institutions tend to produce both longer and healthier lives and higher and healthier stock market valuations?

Whatever the configuration of cause and effect, the correlations are clear. Where life is cheap, stocks are cheap and where life is dear, so are stocks.

Let's look at the data. The Y axis (up and down) below is average life expectancy for a particular country at a particular point in time. The X axis (right and left) is a metric for the value of a market. It uses a broad based index of stocks' aggregate value, which is then adjusted for the size of the country's economy. This is done because it's just not fair to compare the size of a tiny country to a giant one. The line slopes upwards which means that there is a positive correlation between the value of the market and the length of the lives of the people who live there.

How large a difference is there? On average roughly 2 1/2 years.

Performance by metric quintile



Q1 (Highest)








Q5 (Lowest)




The method we use above is a weighted average of the top two quintiles less a weighted average of the bottom two. Is there a big difference between living to 78 and living to 75 1/2? Seems to me like there is, but if you like we can wait to discuss it on your 75th birthday.

Let's look at the other end of the demographic spectrum, the beginning of life. There is hardly a more grim statistical indicator than infant deaths per thousand live births. Here's the data:

The Y axis (up and down) is infant mortality per thousand births and the X axis (right and left) is similar to the market valuation metric used in the prior chart. The difference is that this one focuses on large companies. A broad based index shows a good fit with human lifespan and safe birth, but a large cap based metric shows an even better fit. In other words, Human beings are more likely to be born safely and to live longer when the large companies in the market are at high valuations. You know large companies like, say… the Dow.

It's not just life expectancy and infant mortality. We looked at several of the Fragile States Index factors as well.

Turns out that if you don't want a refugee crisis or internally displaced peoples or high levels of corruption, you want to live in a country which is good at adding points to whatever its version of the Dow is. But doesn't that make sense? The employees of Dow companies are people. The owners are people. The customers are people. It's a pretty strange view of human nature which thinks that what's good for these aggregations of people would be bad for individual people.

Die for the Dow? Not quite. The truth is that most countries are dying to have the sort of standard of living that comes from having something like our Dow. Companies like that will produce the meds which help us through the crisis, and the vaccine which will likely end it.