Psychological Resilience to Major Socioeconomic Life Events

Abstract

Understanding who in the population is psychologically resilient in the face of major life events, and who is not, is important for policies that target reductions in disadvantage. In this paper we construct a measure of adult resilience, document its distribution, and test its predictability by childhood socioeconomic circumstances. We use a dynamic finite mixture model applied to 17 years of panel data, and focus on the psychological reaction to ten major adverse life events. These include serious illness, major financial events, redundancy and crime victimisation. Our model accounts for non-random selection into events, anticipation of events, and differences between individuals in the immediate response and the speed of adaptation. We find considerable heterogeneity in the response to adverse events, and that resilience is strongly correlated with clinical measures of mental health. Resilience in adulthood is predictable by childhood socioeconomic circumstances; the strongest predictor is good childhood health.

Who is resilient in a time of crisis? The importance of financial and non‐financial resources

“…Self‐efficacy is a confident view of one's capability to deal with life's stressors (Bandura, 1997, 2006; Schwarzer & Warner, 2013). It is similar to the construct of locus of control, which has been the focus of a recent economics literature (Caliendo et al., 2015, 2020; Cobb‐Clark et al., 2016; Lekfuangfu et al., 2018; Schurer, 2017), and previously been shown to be associated with a person's psychological resilience to major adverse life events (Etilé et al., 2021). The finding of a protective self‐efficacy effect holds when comparing individuals in the same household, when samples are restricted to different demographic groups and different levels of past psychological health, and when samples are observed at different time‐points in the pandemic.…”

“…This is somewhat surprising because resilience might have important behavioral consequences and appears to be linked to individual and social well‐being by reducing the high economic costs associated with adverse events.” An exception is Etilé et al. (2021), who construct a revealed measure of resilience by modeling individual's psychological resilience to major life events. There is also a related economics literature that explores whether individual characteristics buffer (or insure) wellbeing against negative shocks.…”

The value of health—Empirical issues when estimating the monetary value of a quality‐adjusted life year based on well‐being data

“…The recent findings by Etilé et al. ( 2020 ), who documented a heterogeneous distribution of adaptive potential across subgroups, underline the relevance of this concern also from a normative perspective.…”

“…To what extend this represents an estimation error, however, is debatable and depends on what is perceived to be the "true" impact of ill-health on well-being over time, and whether adaptation, if present, should be corrected for. The recent findings by Etilé et al (2020), who documented a heterogeneous distribution of adaptive potential across subgroups, underline the relevance of this concern also from a normative perspective.…”

Subjective Wellbeing Dynamics

“…A different empirical approach is to first estimate individual-level persistence or resilience, without pre-specifying the individual resilience factors, and then in a second step correlating the estimated resilience with a set of observed characteristics. Etilé et al (2020) take this approach by modelling psychological wellbeing in the first step with a dynamic finite mixture model. In the second step they conclude that an internal locus of control, emotional stability, and cognitive ability increase a person's level of psychological resilience.…”