Recession Depression: Mental Health Effects of the 2008 Stock Market Crash

42 Pages Posted: 12 Jun 2013

See all articles by Melissa McInerney

Melissa McInerney

College of William and Mary

Jennifer Mellor

College of William and Mary - Department of Economics

Lauren Hersch Nicholas

University of Michigan at Ann Arbor - Institute for Social Research (ISR)

Date Written: May 31, 2013

Abstract

How do sudden, large wealth losses affect mental health? Most prior studies of the causal effects of material well-being on health use identification strategies involving income increases; these studies as well as prior research on stock market accumulations may not inform this question if the effect of wealth on health is asymmetric. We use exogenous variation in the interview dates of the 2008 Health and Retirement Study to assess the impact of large wealth losses on mental health among older U.S. adults. We compare cross-wave changes in wealth and health for respondents interviewed before and after the October 2008 stock market crash. We find that the crash reduced wealth and increased depressive symptoms and the use of anti-depressants. These results suggest that sudden wealth losses cause immediate declines in mental health; for example, a loss of $50,000 of non-housing wealth increases the likelihood of feeling depressed by 1.35 percentage points, or by 8%.

Keywords: mental health, depression, health status, wealth, income

JEL Classification: I100, I110

Suggested Citation

McInerney, Melissa and Mellor, Jennifer and Nicholas, Lauren Hersch, Recession Depression: Mental Health Effects of the 2008 Stock Market Crash (May 31, 2013). CESifo Working Paper Series No. 4263, Available at SSRN: https://ssrn.com/abstract=2277438

Melissa McInerney

College of William and Mary ( email )

P.O. Box 8795
Williamsburg, VA 23185
United States

Jennifer Mellor

College of William and Mary - Department of Economics ( email )

Williamsburg, VA 23187-8795
United States

Lauren Hersch Nicholas (Contact Author)

University of Michigan at Ann Arbor - Institute for Social Research (ISR) ( email )

Ann Arbor, MI 48106-1248
United States

HOME PAGE: http://www.psc.isr.umich.edu/people/profile/792/Lauren_Nicholas

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