Economic Crises and Mental Health: Effects of the Great Recession on Older Americans

64 Pages Posted: 7 Mar 2022 Last revised: 22 Dec 2022

Date Written: March 2022


We examine the effect of the Great Recession of 2007-2009 on the mental health of older adults, using longitudinal Health and Retirement Study data linked to area-level data on house prices. We use a variety of measures to capture mental health and rely on the very large cross-sectional variation in falling house prices to identify the impact of the Great Recession on those outcomes. We also account for people who moved in response to falling prices by fixing each person’s location immediately prior to the house price collapse. Our central finding is that the Great Recession had heterogeneous effects on health. While mental health was not affected for the average older adult, mental health declined among homeowners with few financial assets, who were therefore more vulnerable to falling house prices. Importantly, health impacts in this group differed by race and ethnicity: depression and functional limitations worsened among Black and other non-white homeowners and medication use increased among white homeowners. There were no measurable impacts for Hispanic homeowners. These results highlight the importance of examining heterogeneity across multiple dimensions when examining the health impacts of economic conditions.

Suggested Citation

Cutler, David M. and Sportiche, Noemie, Economic Crises and Mental Health: Effects of the Great Recession on Older Americans (March 2022). NBER Working Paper No. w29817, Available at SSRN:

Noemie Sportiche

Harvard University ( email )

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