ORIGINAL PAPER Economic hardship and suicide mortality in Finland, 1875–2010 Marko Korhonen • Mikko Puhakka • Matti Viren Received: 9 December 2013 / Accepted: 11 November 2014 Ó Springer-Verlag Berlin Heidelberg 2014 Abstract We investigate the determinants of suicide in Finland using annual data for consumption and suicides from 1860 to 2010. Instead of using some ad hoc measures of cyclical movements of the economy, we build our analysis on a more solid economic theory. A key feature is the habit persistence in preferences, which provides a way to measure individual well-being and predict suicide. We estimate time series of habit levels and develop an indi- cator (the hardship index) to describe the economic hard- ship of consumers. The higher the level of the index, the worse off consumers are. As a rational response to such a bad situation, some consumers might commit suicide. We employ the autoregressive distributed lags cointegration method and find that our index works well in explaining the long-term behavior of people committing suicide in Finland. Keywords Suicide  Habit persistence  Hall’s consumption function  Cointegration JEL Classification I12  D91 Introduction We explore how strongly the state of the economy influ- ences the variation in the Finnish suicide rates. We investigate the extent of this influence by following the tradition of the rational approach to human behavior ini- tiated by Becker [6]. We are aware of many other approaches (medical, sociological, etc.) that attempt to explain the appearance and number of suicides over time. 1 Already Durkheim’s classic treatment Le Suicide in 1897 [15] recognized the importance of economic conditions on the appearance of suicides. Lester and Yang [22] is a recent extensive study summarizing sociological, medical and economic aspects of suicides. Hamermesh and Soss [17] is the seminal work using the economic approach to suicides. 2 They emphasize the viewpoint that suicide can be viewed as a rational act. They develop a utility maximizing framework to explain the decision to commit suicide. Decision makers differ by their age and ‘‘the taste for living.’’ They find that higher unemployment rates increase the number of suicides. More recently, Ruhm [28] in his extensive study on economic conditions and health reinforces the earlier finding of Hamermesh and Soss. There have also been many studies on the economic approach to suicides with different emphases, which have been extensively surveyed by Chen et al. [9]. Theoretical bases of many of those studies have not been very explicit. Following an important study by Hall [16] on inter- temporal consumption behavior, we argue that modeling consumer preferences with habit persistence has great M. Korhonen  M. Puhakka (&) Department of Economics, University of Oulu, P.O. Box 4600, 90014 Oulu, Finland e-mail: mikko.puhakka@Oulu.fi M. Korhonen e-mail: marko.korhonen@Oulu.fi M. Viren Department of Economics and the Public Choice Research Centre, University of Turku, 20014 Turku, Finland e-mail: matvir@utu.fi M. Viren Bank of Finland, P.O. Box 160, 00101 Helsinki, Finland 1 See, e.g., Hawton and van Heeringen [18]. 2 This tradition continued, for example, in the study by Cutler et al. [10]. See also an unpublished work by Becker and Posner [7]. 123 Eur J Health Econ DOI 10.1007/s10198-014-0658-5