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How to calculate the economic impact of grief

Finding a way forward. Shutterstock

The death of a child is one of the most traumatic experiences that a parent can experience. Those who do experience it can struggle to recover. Child loss leads to intense grief and depression. Many affected parents state even decades later that their sense of joy in life has simply never returned.

These changes may also have an effect on the parents’ economic well-being.

Now, it might seem callous to link the huge pain of mourning for a lost child to the implications for the parents’ earnings. As the stereotype suggests, it takes an economist to quantify emotions in terms of money. And I admit that the economic impact is of second order importance when seen in the light of the intense grief in such heartbreaking circumstances.

But there are sensible reasons for examining the long-term impact on economic health. Deaths due to traffic accidents or medical malpractice may often result in financial compensation. In such cases, one should take future income losses for the parents into account.

Perhaps more importantly, not all parents suffer to the same extent in terms of their earnings. Our data show that many years after the loss of a child, some parents earn 30% less, year after year after year, whereas others start with an income loss of 10% but then almost fully recover their income loss some six years later. By following parents over time, we can learn a lot about what drives these differences. Is there some event after the child loss that increases the likelihood of a downward spiral? And if so, can we use policy measures to prevent that from happening?

Studying the economic effects of child loss may also shed light on effects of grief in general. Grief can be triggered by many other, less dramatic, events, such as the death of a more remote family member or the end of a relationship. If we see that the effect on the father’s earnings depends on the gender of the child and on the household composition at the time of loss then we may be able to deduce more general insights about what drives the severity of grief responses. This is what we set out to do in our research.

Much of the existing literature on child loss focuses on the intensity of the grief itself. As child loss is rare, and as many affected parents are not in the mood to be interviewed by academic researchers, these studies often end up with very small numbers of parents available as study material for interviewing. It is difficult from a practical point of view to follow them up years after the child loss, or to gain access to comparison groups of parents who were in the same situation but who did not experience child loss.

In our research, we took a radically different approach. We did not talk to the parents. Instead, we used population registers following the whole population of a country (Sweden) for 11 years (1993-2003) to observe child deaths and the circumstances in the household before and after the death.

We need to talk about grieving. Shutterstock

The registers provide information on income, employment, use of unemployment benefits and sickness benefits, marital status, health, and fertility of the parents. Since the whole population is covered by the registers, we can compare the fate of the affected parents to that of parents who did not experience child loss but who otherwise lived in similar circumstances.

In many countries, such data is not available for research. Perhaps needless to say, the data protection measures imposed on us are extremely strict.

The cost of loss

We found that the economic well-being of the parents suffers for a long time after the intense grief has subsided. In addition, parents who lose a child are more likely to leave employment, get divorced, and experience a deterioration in mental health.

For example, the chances of being out of work some years after the loss is up to 9% greater than if the child had not died. In the first years after the loss, the probability of hospitalisation for mental health problems is two to three times higher than otherwise. Of course, these are average effects, and there are many bereaved parents who are less affected.

The effects do not depend on the age or birth order of the child or on family size. Whether the child is a son or a daughter does not matter either, with one exception. If a family has more than one daughter and one of them dies then the father seems to be less affected than if the family has multiple sons of which one dies. To be precise: in the second scenario the father’s income goes down more significantly than in the first. For mothers, we do not see such differences.

It is understandable that a grieving parent wants to quit work in such unbearable circumstances. But to do so may trigger a downward sloping path towards irrevocable adversities. After a substantial amount of time out of work, it becomes more and more difficult to find a job again.

These results suggest that it is important to communicate to parents who have just lost a child that they should continue participating in the labour force. In addition, if such parents do actually quit employment, it may be sensible to encourage them to enter tailored active labour market programs and therapies to prevent a downward spiral in their subsequent life.

Talking about death is never easy. But if we can anticipate the economic problems that bereaved parents are likely to face, it may be possible to help them avoid the additional pain of financial destitution.

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