Recession depression: Mental health effects of the 2008 stock market crash

Abstract

Do sudden, large wealth losses affect mental health? 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 mental health for respondents interviewed before and after the October 2008 stock market crash. We find that the crash reduced wealth and increased feelings of depression and use of antidepressant drugs, and that these effects were largest among respondents with high levels of stock holdings prior to the crash. These results suggest that sudden wealth losses cause immediate declines in subjective measures of mental health. However, we find no evidence that wealth losses lead to increases in clinically-validated measures of depressive symptoms or indicators of depression.

Psychological Distress and Hypertension: Results from the National Health Interview Survey for 2004-2013

“…This is consistent with other studies that demonstrate striking associations between poverty and mental disease [19,20,21,22,23]. Tampubolon and Hanandita [22] showed that a 1% reduction in per capita household expenditure is associated with a corresponding increase in depressive symptoms.…”

“…Tampubolon and Hanandita [22] showed that a 1% reduction in per capita household expenditure is associated with a corresponding increase in depressive symptoms. Many individuals who become unemployed or experience dynamic levels of job insecurity and economic deprivations/wealth loss may encounter significant reductions in mental health scores, increased psychological stress, and an increase in the use of antidepressant medications [19,20,21]. …”

Does prescription drug coverage improve mental health? Evidence from Medicare Part D

“…The continuous measure of CESD does not allow us to distinguish between transient periods of distress versus a clinical diagnosis of depression. Following previous literature (McInerney et al, 2013), we also create a binary indicator for a score of 3 or higher on the 8-item scale. This cutoff point on the 8-item scale corresponds to a 16 point threshold on the 20-item scale, which is the traditional indicator for a clinical diagnosis of depression (Schane et al, 2008).…”

“…Previous studies have shown that financial strain is positively associated with depressive symptoms (Mendes de Leon et al, 1994), although it is not clear that this represents a causal effect. More generally, higher income or wealth has been shown to improve mental health (Evans and Garthwaite, 2010;McInerney et al, 2013), although part of the effect of income may be operating through increased use of antidepressants. Madden et al (2008) showed that in addition to improving adherence to medication regimens, Medicare beneficiaries were less likely to report that they spent less money on food, heat and other basic needs in order to have money for medicines, post-Part D. To the extent that lower out-of-pocket spending improves mental health through pathways such as reduced financial strain or an income effect, Part D may reduce depression indirectly.…”

Economic Conditions at School Leaving and Sleep Patterns Across the Life Course

“…The CESD is a validated measure of depressive symptoms (Radloff 1977;Kohout et al 1993) that is commonly used in the economics literature to study mental health (Falba, Sindelar, and Gallo 2009;Maclean 2013;McInerney, Mellor, and Nicholas 2013;Ayyagari and Shane 2015;Sabia and Rees 2015). Our specific indicator of sleep quality is a single item: "During the past week, my sleep was restless: 1) rarely, none of the time, or one day; 2) some of the time, a little of the time, or 1 to 2 days; 3) occasionally, a moderate amount of the time, or 3 to 4 days; and 4) most of the time, all of the time, or 5 to 7 days."…”