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Volume 1, No 3, June 2013 View in your web browser

Empire of suicide - How can we reduce the tragedy?

Thinking through the economic 'incentives' to suicide in Japan

By Yasuyuki Sawada

Photo credit: willielee

Tohoku University’s Professor Akiomi Kitagawa once told me the tale of a monk who was killed by eating poisonous hiratake (a kind of oyster mushrooms) in the Anthology of Tales Long Ago Past (Konjaku Monogatarishū).

“A monk died after he accidently ate poisonous hiratake mushrooms. His lord felt sorry for the monk and paid for his funeral. Even after hearing that incident, another monk at Todaiji temple ate hiratake mushrooms. People wondered why he risked his life. Then he said, 'Since I don't have any money for my funeral after my death, in order to obtain the lord's sympathy and finance my funeral, I ate hiratake mushrooms. Yet, unfortunately, it did not work.”

It is surprising to find a mention like this of an economic incentive to suicide in a text hundreds of years old. Should people have implored the monks to stop? If they should try to prevent the monk’s suicide, what would be the basis for the intervention?

From 1998-2011, 90 people committed suicide every day in Japan

It almost goes without saying that suicide is one of Japan’s most serious social problems. Suicide in Japan has three peculiar characteristics. The first is the sudden increase in suicides from 1997 to 98; the second is the plateau of suicides at over 30,000 people per year for the 14 year period from 1998 to 2011—the number dropped to around 27,766 in 2012 but still too many; and the third is the ‘change in age composition’ of suicide over time (with more younger people committing suicide). According to police statistics, the total number of suicides in Japan in 2011 was 30,651, which means for this 14 year period, every day, around 90 people committed suicide in Japan. In response to this problem, the Basic Law of Suicide Prevention was established in 2006 and a number of anti-suicide measures began to be implemented.

In the contemporary world the idea that suicide is an individual’s choice is quite deeply rooted in society. In Japan there are many examples which glorify suicide, in the chapter of the Bushidō, ‘The institutions of suicide and redress’, or in the practices of traditional hara-kiri (death by self-disembowelment), jiketsu (taking one’s life) and even through the suicide of well-known figures viewed by many – as in the case of the kamikaze pilots (tokubetsu kōgekitai). If suicide is glorified in Japan, why would we bother with any kind of ‘measures’ to stem the tide of suicide?

“Based on this estimate, one in every 37-44 people is a relative of someone who has committed suicide in Japan.”

Photo credit: throgers

The first reason for such measures are the significant 'negative externalities' brought about by suicide. These include the serious psychological, emotional, and financial negative externalities affecting the families and friends of someone who has committed suicide. There are no official statistics relating to those left behind after a loved one has committed suicide, however in our research group (Chen, Choi, Mori, Sawada, and Sugano, 2009) we have attempted to estimate the effect on relations of the first degree (including siblings) in Japan. By 2006, for every person who committed suicide there were approximately 4.78 people left behind; approximately 86,230 people under 20 who had lost a parent through suicide; and a total of more than 2,920,000 bereaved people as a result of suicide. Based on this estimate, one in every 37-44 people is a relative of someone who has committed suicide in Japan. If we expand this to include extended families, friends, colleagues and neighbours, there would be a huge scale negative externality affecting the entire Japanese population. Existing studies have shown that bereaved family members reveal high suicide risks. There is also evidence of the Werther Effect in Japan—where a high profile suicide has a tendency to stimulate suicidal behavior in other people.

“If suicide is glorified in Japan, why would we bother with any kind of ‘measures’ to stem the tide of suicide?”

The possibility that market incompleteness may in fact encourage suicide could also be given as a reason for stepping up suicide prevention measures. More specifically, this is related to the Japanese co-guarantor system in micro-loans for small, medium and specialist industries as well as self-run businesses. This system entails canny mechanisms to reduce strategic default, like easing liquidity constraints for micro-enterprise owners without collateral, adverse selection through unsecured loans (the higher the risk associated with a person, the more likely they will remain ‘borrowers’) and moral hazard (not keeping track of how money is spent, resulting in loan default). However according to our research, it is a theoretical possibility that the primary borrower may commit suicide if the burden of a loan’s ‘unlimited liability’ is too heavy. If in certain circumstances these kinds of peculiar contractual situations can induce suicide, then it is necessary to reexamine them in the context of suicide prevention.

Life insurance offered by consumer credit companies is another example of a peculiar contractual arrangement which may relate to suicide. This sort of life insurance has liquidity constraints, that is, for borrowers who find themselves with a credit shortage, their life insurance contract and loan contract are bundled together, making a loan for people without collateral possible. This kind of arrangement can be interpreted as an interlinked contract under which incentive problems and thus market incompleteness can be corrected. However, while consumer credit life insurance reduces the borrower’s liquidity constraints, contracts also increase the incentive to commit suicide in order to pay back the loan. From the standpoint of suicide prevention, this is not really a desirable contractual situation.

10% of insurance payouts related to suicide deaths

There is also the possibility that suicides have a financial motivation - that by committing suicide you can make a profit. In the beginning of this article we looked at a story from the Tales of Long Ago Past but in even in the contemporary world, it is necessary that we discuss suicide in the context of life insurance.

“The problem of financial incentives to suicide within life insurance contracts, and that of adverse selection and moral hazard in the life insurance market are clearly found in our research.”

In the usual private life insurance scheme, as long as the exemption period is over suicide related deaths can receive an insurance payout. For one of the big life insurance firms, suicide-related payouts from 1995 to 2004 increased by 50%, and there are reports that across all insurance payouts 10% are suicide related. Until 1999, the exemption period for suicide-related payouts from the big life insurance firms was one year. By 2000, this had been extended to two and then three years in 2005.

The problem of financial incentives to suicide within life insurance contracts, and that of adverse selection and moral hazard in the life insurance market are clearly found in our research, which looks at the relationship between suicide and life insurance contracts using OECD country data (Chen, Choi, and Sawada, 2008). The life insurance system is created to decrease the risk of causing financial difficulty for those left behind. If this kind of contract can potentially become a motive for suicide, taking action on a fundamental level may be difficult. Though this may be the case, the result of our own analysis is that from the standpoint of suicide prevention, the life insurance system and loan co-guarantee systems which have supplemented the function of the market must be reconsidered. In order to revaluate these systems and contracts, a high quality of evidence which takes into account the real ‘on the ground’ situation in detail is essential.

Detailed economic analysis to use in the context of suicide prevention

Though more than six years have passed since the Basic Law of Suicide Prevention was established in October 2006, Japan is bucking the trend of other OECD countries. When country level measures are implemented, these OECD countries have shown a decrease in suicides. Based on a study by Tetsuya Matsubayashi and Michiko Ueda, if Japan were part of this trend, the number of people committing suicide in Japan should have decreased by 1766 people rather than continuing to plateau (Matsubayashi and Ueda, 2011). Obviously there is an immediate need to strengthen measures taken at the micro-level in addition to country-level measures to combat suicide in Japan.

At the micro-level, the establishment of comprehensive anti-suicide measure by local government is essential. Financial support and the fostering of human resources so central to these measures is also necessary. At the regional level, dealing with the background issues which relate to suicide requires cooperation across a number of fields. Measures which target the economic difficulties of employment, debt, and business financial difficulties are crucial, as well as the necessary legal consultation required for the implementation of these measures. In this context of cooperation, amongst others, Adachi ward’s city-level suicide prevention scheme ‘Life Support’ is the kind of the measure which deserves our attention. In this scheme, the local government has become the axis for public/private cooperation. There is also the potential to think of regional primary carers, or the role of the ‘GP’ as a primary mover in this type of cooperation. At the same time, there are hardly any proven examples of useful suicide prevention measures and the extent of their success.

Whatever the future strategy, in order to create effective suicide measures, policy plans and valuations based on evidence are essential. For example, the use of police statistics on suicide is indispensable for us to conduct detailed analysis and use the empirical findings gained from these statistics to build future suicide prevention measures. Academia, and in particular evidence based economics using micro-data forms the basis of anti-suicide planning and implementation. Collecting high quality evidence and using micro-data is one way in which economics can make an important contribution on the ground in this ‘empire of suicide’.


Chen, Joe, Yun Jeong Choi, and Yasuyuki Sawada (2010). "Joint Liability Borrowing and Suicide", Economics Letters 109(2): 69-71.

Chen, Joe, Yun Jeong Choi, and Yasuyuki Sawada (2008). "Suicide and Life Insurance," CIRJE Discussion Paper Series F-558.

Chen, Joe, Yun Jeong Choi, Kohta Mori, Yasuyuki Sawada, and Saki Sugano. (2009). “Those Who Are Left Behind: An Estimate of the Number of Family Members of Suicide Victims in Japan,” Social Indicators Research 94(3): 535-544, 2009.

Matsubayashi, Tetsuya and Michiko Ueda (2011). "The Effect of National Suicide Prevention Programs on Suicide Rates in 21 OECD Nations," Social Science & Medicine 73(9): 1395-1400.

This article is an updated and abridged version of the article ‘Japan: Empire of suicide - How can we reduce the tragedy?’ (Jisatsu teikoku Nippon, dōshitara higeki wo heraseru noka) originally published in Nikkei Business on March 28, 2012. The original article in Japanese is available on the Nikkei Business website.

Translation: Jill Mowbray-Tsutsumi

About the author

Yasuyuki Sawada is a professor in the Faculty of Economics at the University of Tokyo and visited the AJRC in November 2012. He has also been a Visiting Researcher of the JICA Research Institute (JICA-RI); Faculty Fellow of the Research Institute of Economy, Trade, and Industry (RIETI), a Visiting Fellow to the Bangladesh Institute of Development Studies (BIDS), and a member of intergovernmental Joint Research Project on a New Era of Japan-Korea Relations. His research interests include econometric investigations of individual, household and firm behaviours under risks using micro-data from developing and developed countries such as China, India, Pakistan, the Philippines, Sri Lanka, Vietnam, and Japan. Recently, he has been investigating the impacts of natural disasters on household welfare including the Sichuan, Kobe, Chuetsu, and Tohoku earthquakes, the Asian Tsunami disaster, Typhoon Milenyo in the Philippines, and avian influenza in Vietnam.

About AJRC

The Australia-Japan Research Centre (AJRC) at the Crawford School of Public Policy conducts research to explore and improve understanding of the economies and economic policy processes in Australia and Japan and both countries' strategic interests in the Asia Pacific economy. Its policy-oriented areas of interest cover developments in regional economic cooperation and integration and encompass research on trade, finance, macroeconomics and structural and regulatory reform, as well as international economic relations.

Contact AJRC

Associate Professor Ippei Fujiwara
Executive Director (Acting)
Australia Japan Research Centre (AJRC)
Crawford School of Public Policy
The Australian National University 
Canberra, ACT 0200, Australia 

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