GAINESVILLE, Ga., June 23, 2016 /PRNewswire/ -- As Zika spreads, the race is on to determine how big a risk the virus poses for the Olympics and whether the epidemic will blow up worldwide. One key is uncovering what's behind the pathogen's sudden growth after 69 years of obscurity.
A new study points to an unexpected explanation: a depressed social mood, as indicated by a prolonged downtrend in the stock market in the susceptible region. The study, "Exploring Socionomic Causality of Social Health and Epidemics," is available for download on the Social Science Research Network (SSRN.com). Download it here.
Researchers from the Georgia-based Socionomics Institute studied nine major epidemics in more than seven countries over three centuries. They found a striking thread. In each case, a severe or long bear market in stocks preceded the outbreak. The Zika epidemic emerged in Brazil after a five-year, 36% decline in the country's Bovespa Index.
"Prolonged periods of zero-to-negative stock index performance are a sign that emerging disease outbreaks should be taken very seriously," said Alan Hall, the study's lead author.
The researchers also found that bear markets front-ran all four of London's 19th century cholera outbreaks as well as the 20th century's Spanish Flu, encephalitis lethargica, Hong Kong Flu and HIV/AIDS epidemics. The relationship persists in the 21st century. Bear markets preceded epidemics of SARS, H1N1, Ebola and now Zika.
In 1994, market theorist Robert Prechter first linked infectious disease outbreaks and stock market declines, observing, "communicable disease sometimes plays a prominent role in major corrective periods." Hall confirmed. "The more evidence we get, the clearer the picture becomes. Bear markets are bad news for public health."
In the past ten years, academics worldwide uncovered a slew of evidence connecting stock market declines to other negative health outcomes, such as strokes, heart attacks, hospitalizations for psychological conditions, firearm-related injuries, cigarette smoking, binge drinking and fatal alcohol-related car accidents. The research offers no consistent explanation for the link between stocks and health.
Socionomic theory says that waves of social mood drive changes in both markets and public health. When investors' mood sours, they drive stock prices lower. After long periods of depressed mood, society becomes vulnerable to epidemic disease.
So, where's the next epidemic likely to occur? "We can't predict the exact timing or location of epidemics," said Hall. "But I can tell you that we are watching the sagging stock markets of Puerto Rico, Greece and Russia very carefully."
About The Socionomics Institute (SI)
The Socionomics Institute studies waves of social mood and their role in driving cultural, economic and political trends. SI publishes the monthly magazine The Socionomist. The Atlantic, Barron's, Esquire Magazine, The Futurist Magazine, TIME, MarketWatch, Mother Jones, Nature, New Scientist, Science, USA Today and others have all covered work by socionomists. Learn more at http://www.socionomics.net/.
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SOURCE The Socionomics Institute