Depression for Economists

45 Pages Posted: 27 Dec 2016

See all articles by Jonathan de Quidt

Jonathan de Quidt

Stockholm University - Institute for International Economic Studies (IIES)

Johannes Haushofer

Princeton University - Woodrow Wilson School of Public and International Affairs

Date Written: December 2016

Abstract

Major depressive disorder (MDD) is one of the most prevalent mental illnesses worldwide. Existing evidence suggests that it has both economic causes and consequences, such as unemployment. However, depression has not received significant attention in the economics literature. In this paper, we present a simple model which predicts the core symptoms of depression from economic primitives, i.e. beliefs. Specifically, we show that when exogenous shocks cause an agent to have pessimistic beliefs about the returns to her effort, this agent will exhibit depressive symptoms such undereating or overeating, insomnia or hypersomnia, and a decrease in labor supply. When these effects are strong enough, they can generate a poverty trap. We present descriptive evidence that illustrates the predicted relationships.

Suggested Citation

de Quidt, Jonathan and Haushofer, Johannes, Depression for Economists (December 2016). NBER Working Paper No. w22973, Available at SSRN: https://ssrn.com/abstract=2890077

Jonathan De Quidt (Contact Author)

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden

Johannes Haushofer

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

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