The dust jacket of their book states, “Capitalism, which over two centuries lifted countless people out of poverty, is now destroying the lives of blue-collar America.” Fortunately, their argument is much more nuanced than the book jacket. But it is also, at times, contradictory. Their discussion of the health care system is particularly interesting both for its insights and for its confusions. In their last chapter, “What to Do?” the authors suggest various policies but, compared to the empirical rigor with which they established the facts about deaths by despair, their proposals are not well worked out. One particularly badly crafted policy is their proposal on the minimum wage.

The data / Case and Deaton start off on the wrong foot by claiming that the median inflation-adjusted wages of American men “have been stagnant for half a century” and that wages for white men without a college degree fell by 13% between 1979 and 2017. In a heavily footnoted book, they did not give a source for those two claims. But they almost certainly used the Consumer Price Index to adjust for inflation. The problem is that the CPI notoriously overstates inflation for that period. If we use the more accurate Personal Consumption Expenditure price index, which itself overstates inflation somewhat, we reach two very different conclusions: (1) wages of American men rose by 25% over that half century, and (2) wages for white men without a college degree, rather than falling by 13% from 1979 to 2017, actually rose by 4.5%. That last number is modest, but it is up, not down.

Case and Deaton get onto stronger ground by discussing what they know a lot about: death rates of Americans by age, gender, color, and presence or absence of a bachelor’s degree. Their findings are shocking. They focus on the death rates of white, non-Hispanic men and women aged 45–54, which began falling rapidly around 1970 and reached its bottom in 1999. After that, though, it started to rise. Had the decline continued at its pre-1999 rate, the authors note, the United States would have avoided 600,000 deaths of mid-life Americans. Moreover, they note, mortality of middle-age people continued falling in France, Sweden, and the United Kingdom.

To understand what is behind the increase in the death rate, the authors look at state data and note that death rates increased in all but six states. The largest increases in mortality were in West Virginia, Kentucky, Arkansas, and Mississippi. The only states in which midlife white mortality fell much were California, New York, New Jersey, and Illinois. All four of the latter states, they note, have high levels of formal education. That fact leads them to one of their main “Aha!” findings: the huge negative correlation between having a bachelor’s degree and deaths of despair.

To illustrate, they focus on Kentucky, a state with one of the lowest levels of educational attainment. Between the mid-1990s and 2015, Case and Deaton show, for white non-Hispanics aged 45–54 who had a four-year college degree, deaths from suicide, drug overdose, or alcoholic liver disease stayed fairly flat at about 25–30 per 100,000. But for that same group but without a college degree, the deaths in the same categories zoomed up from about 40 in the mid-1990s to a whopping 130 by 2015, over four times the rate for those with a college degree.

Why is a college degree so important? One big difference between those with and without a degree is the probability of being employed. In 2017, the U.S. unemployment rate was a low 3.6%. Of those with a bachelor’s degree or more, 84% of Americans aged 25–64 were employed. By contrast, only 68% of those in the same age range who had only a high school degree were employed.

That leads to two questions. First, why are those without a college degree so much less likely to have jobs? Second, how does the absence of a degree lead to more suicide and drug and alcohol consumption? On the first question, the authors note that a higher percentage of jobs than in the past require higher skills and ability. Also, they write, “some jobs that were once open to nongraduates are now reserved for those with a college degree.”

I wish they had addressed this educational “rat race” in more detail. My Econlog blogging colleague Bryan Caplan, an economist at George Mason University, argues in his 2018 book The Case Against Education that a huge amount of the value of higher education is for people to signal to potential employers that they can finish a major project and be appropriately docile. To the extent he is right, government subsidies to higher education make many jobs even more off-limits to high school graduates. Yet, Case and Deaton do not cite Caplan’s work. Moreover, in their final chapter on what to do, they go the exact wrong way, writing, “Perhaps it is time to up our game to make college the norm?” That policy would further narrow the range of jobs available to nongraduates, making them even worse off.

On the second question — why absence of a degree leads to more deaths of despair — they cite a Gallup poll asking Americans to rate their lives on a scale from 0 (“the worst possible life you can imagine”) to 10 (“the best possible life you can imagine”). Those with a college degree averaged 7.3, while those with just a high school diploma averaged 6.6. That is not a large difference, a fact they do not note.

Where the authors are at their best is in dismissing various suggested causes of these deaths that others have posited, in particular, increased poverty and growing income inequality. On poverty, they point out the obvious: the official poverty rate — the percentage of households below the poverty line — fell throughout the booming 1990s, increased slightly before the Great Recession and more quickly during the recession, and slowly declined afterward. Deaths from despair, by contrast, rose uninterruptedly and rapidly from the early 1990s on. The pattern just does not fit. As for increasing income inequality, state data do not fit the explanation. They note that New York and California have relatively high income inequality but have among the lowest mortality rates.

Why the despair? / So, what are the culprits behind the deaths of those without college degrees? Case and Deaton blame the job market and health insurance. Jobs for those without college degrees do not pay as much and do not generally carry much prestige. And, as noted above, Case and Deaton mistakenly think that real wages for such jobs have fallen. Some economists, by adding nonmonetary benefits provided by employers and by noting the amazing goods we can buy with our wages such as cell phones, conclude that even those without a college degree are doing better. Case and Deaton reject that argument. They do not deny that health care now is better than it was 20 years ago, but they write that a typical worker is doing better now than then “only if the improvements — in healthcare, or in better entertainment through the internet, or in more convenience from ATMs — can be turned into hard cash by buying less of the good affected, or less of something else, a possibility that, however desirable, is usually not available.” They continue, “People may be happier as a result of the innovations, but while it is often disputed whether money buys happiness, we have yet to discover a way of using happiness to buy money.”

That thinking is stunning. Over many decades, economists have been accused, usually unjustly, of saying that only money counts. We have usually responded by saying, “No, what counts is utility, the satisfaction we get out of goods and services and life in general.” But now Case and Deaton dismiss major improvements in the happiness provided by goods and services by noting that happiness cannot be converted to money. That is a big step backward in economic thinking.

The strangest part of the book is their ambivalent attitude toward health care and health insurance. They start on the right track, writing that the American medical system “is nothing like a free market” and that highly regulated corporations seek protection from competition “in a way that would be impossible in a free market.” One might then expect them to advocate freer health care markets, but they do not. Instead, they focus on two things: (1) how expensive health insurance is, and (2) patent monopolies granted to pharmaceutical companies. On the first, they argue correctly that the increasing cost of health insurance is one of the main culprits in the slow growth of wages. And they attribute the high cost of health insurance to high payments to health care providers. But wouldn’t a good solution be to allow more competition in health care provision? To their credit, they criticize restrictions that exclude foreign doctors from practicing here. But they do not mention certificate-of-need laws that prevent medical providers from entering the market and driving down prices.

Ironically, Case and Deaton focus most of their fire on the monopoly restriction that has the most justification: drug patents. Without patents and with the maze that the Food and Drug Administration has created in the approval process for drugs, the flow of new drugs would slow dramatically.

Case and Deaton are outraged about Purdue Pharmaceutical producing OxyContin, which they call “legalized heroin.” That outrage seems to shade everything they write about the pharmaceutical industry. For example, in discussing medication-assisted treatment (MAT) that helps people get off their addiction, they write, “It takes a strong stomach to watch pharma and their allies push MAT so that they can profit both by causing the epidemic and by curing it.” Really? I would have thought that all it takes is an understanding of incentives. I am glad that some firms have an incentive to help people with their addiction. I wish that Case and Deaton were also.

In their final chapter on what to do about deaths of despair, they suggest expanding Medicaid and claim that would help people who are dealing with drug addiction. Maybe. But the 2020 Economic Report of the President argues that Medicaid and other government subsidies in the first decade of this century were one of the causes of the drug problem. Case and Deaton also inch up to advocating, without quite endorsing, a proposal for “universal health care.” In doing so, they misquote Kenneth Arrow’s 1963 pathbreaking article on health insurance, claiming that he wrote, “The laissez-faire solution for medicine is intolerable.” What Arrow actually wrote is, “It is the general social consensus, clearly, that the laissez-faire solution for medicine is intolerable.” A look at the paragraph in which that sentence appears shows that he is quite careful about drawing any conclusions himself. But a reasonable guess is that he showed some preference for certification of doctors, à la Milton Friedman, over exclusion through compulsory licensure.

The authors point out that a Universal Basic Income either would be way too expensive or, if it replaced the welfare state, would make many elderly and disabled people much worse off. They also argue that “small increases” in the minimum wage “do not cost jobs,” but they cite none of the considerable literature that finds the opposite. Based on their reading of the academic literature, they recommend a gradual increase in the minimum wage from $7.25 an hour to $15. They do not say how gradual. If it is over, say, five years and if inflation over the next five years averages 3% (most economists believe it will be less than 3%), that would be a real increase of 78%. That is not a “small increase.” It would certainly cost the jobs of many people whom Case and Deaton are concerned about. Also, one of the measures that would most help those without college degrees would be to scale back substantially the degree of occupational licensing. The authors mention that idea only briefly.

The authors are rightly critical of substantially higher taxes on high-income people, noting that many of them got that way by producing goods that other people wanted. Unfortunately, one thing missing from their proposals is the idea of increasing people’s real wages by reducing the cost of housing. Economists know how to do that: abolish the restrictions that discourage residential construction. Harvard’s Edward Glaeser and Wharton’s Joseph Gyourko have shown definitively that housing prices in cities like Los Angeles, San Francisco, and New York are high not because of the scarcity of land but because of the scarcity of building permits. (See “Zoning’s Steep Price,” Fall 2002.) Case and Deaton criticize land-use regulations in one sentence, but never hint about the enormity of the problem those regulations cause.

In short, they are best at what they know best: death rates by age, race, and education. They are right to criticize some of the facile claims of causation made by others. They also, fortunately, do not blame capitalism as much as the book jacket suggests. Unfortunately, the policy proposals they focus on most either do not address the problem they want to solve or would actually make the problem worse.