Austerity and Mortality
Introduction
Austerity measures refer to significant reductions in government spending aimed at reducing public debt, typically implemented in response to economic crises. Berman and Hovland (2025) studies austerity program introduced by the UK government after the 2010 general election, which involved major cuts to welfare benefits and changes in healthcare spending. The intended beneficiaries of these policies were government budget authorities pursuing fiscal consolidation, while negatively affected groups included the general public, particularly welfare recipients and people reliant on public health services.
The paper examines the impact of these austerity measures on life expectancy and mortality rates in the United Kingdom between 2010 and 2019. The study uses a large panel dataset compiled from administrative records on life expectancy, mortality, and public spending at the local authority district level. To identify the effects of the policy, the paper uses a difference-in-differences design, comparing areas more heavily affected by spending cuts to those less affected.
The paper finds significant negative effects of austerity measures, especially welfare benefit cuts, which led to reductions in life expectancy of approximately 2.5 to 5 months by 2019. Women were nearly twice as affected as men. Although healthcare spending cuts had a larger per-pound effect, welfare benefit cuts were the main driver of declining life expectancy. The paper also estimates around 190,000 excess deaths caused by these policies, roughly 3% of all deaths during the period.
MVPF = 2.3
Net Cost
To calculate the net cost of the austerity measures, the paper considers the total savings to the UK government resulting from cuts to welfare benefits and healthcare spending. For welfare, the official savings reported to the House of Commons total £38.4 billion between 2010-2011 and 2019-2020 (Keen 2016). For healthcare, the paper estimates a £0.35 billion reduction based on changes in regional per capita healthcare spending, scaled to national population levels and accumulated over nine years. These two components together yield a total net gain of £38.75 billion. The estimate is conservative, as it does not account for potential indirect costs such as increased demand on emergency services or long-term health consequences, may offset fiscal savings.
Willingness to Pay
The benefits to policy recipients are measured in terms of years of life lost due to austerity-related excess deaths, monetized using the UK government’s Value of a Life Year (VOLY). The VOLY is set at £60,000 (2020 GBP) per Chilton et al. (2020). For each age and sex group, the number of excess deaths caused by austerity was estimated, then multiplied by the remaining life expectancy at the time of death and by £60,000. This calculation was adjusted for inflation using an appropriate deflator. The total willingness to pay across all affected groups amounted to -£89.6 billion for the combined healthcare and welfare cuts. For welfare cuts alone, the total was -£109.2 billion, and for healthcare cuts, -£3.45 billion. These figures represent conservative estimates, as they exclude non-mortality impacts and potential quality-of-life losses.
MVPF Summary
The MVPF is calculated as the ratio of total benefits to recipients (valued at £89.6 billion in life years lost) to the net fiscal cost (total savings of £38.75 billion). This yields a baseline MVPF of 2.3, indicating that the value of life lost due to austerity exceeds the government’s savings.
References
Berman, Yonatan and Tora Hovland (2025). “The Impact of Austerity on Mortality and Life Expectancy.” IZA Discussion Paper No. 17853. https://docs.iza.org/dp17853.pdf
Chilton, Susan, Michael Jones-Lee, Hugh Metcalf, Jytte S. Nielsen, Rachel Baker, Cam Donaldson, Helen Mason, Neil McHugh, Rebecca McDonald, and Michael Spackman (2020). “A Scoping Study on the Valuation of Risks to Life and Health: The Monetary Value of a Life Year (VOLY).” https://researchonline.gcu.ac.uk/en/publications/a-scoping-study-on-the-valuation-of-risks-to-life-and-health-the-
Keen, Richard (2016). “Welfare Savings 2010-11 to 2020-21.” House of Commons Library, House of Commons Library, Research Briefing CBP-7667. https://commonslibrary.parliament.uk/research-briefings/cbp-7667/
Policy Features
- Category
- Social Insurance
- Sub-Category
- Health Adult
- Beneficiary Type(s)
- Adults, Mothers and pregnant women, Parents, People receiving housing assistance, Seniors (65+)
- Country of Implementation
- United Kingdom
- Year of Implementation
- 2010
- Empirical Method
- Difference in Differences
- Research Type
- Primary
- Peer Reviewed
- No
- MVPF Publication Link
- docs.iza.org/dp17853.pdf