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Recession Depression

Fall 2013: Econ 339 Final Presentation. Alex Crouse November 18, 2013 . Recession Depression. Reference: Melissa McInerney , Jennifer M. Mellor, Lauren Hersch Nicholas (2013), Recession Depression, Journal of Health Economics , 32, p. 1090-1104. Total:_________. Recession Depression.

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Recession Depression

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  1. Fall 2013: Econ 339 Final Presentation Alex Crouse November 18, 2013 Recession Depression Reference: Melissa McInerney, Jennifer M. Mellor, Lauren Hersch Nicholas (2013), Recession Depression, Journal of Health Economics, 32, p.1090-1104 Total:_________

  2. Recession Depression Mental health effects of the 2008 stock market crash By: Alex Crouse

  3. Introduction • Do sudden, large wealth losses affect mental health? • Multiple studies indicate wealth losses cause immediate declines in subjective measures of mental health • Previous studies use exogenous shocks • People respond differently to losses than gains (Endowment effect)

  4. Introduction (continued) • Stock market crash began in 2008 • 8 – day trading period DJIA fell by nearly 2400 points / 22% • By December 2008, retirement accounts had lost one-third of their value on average • Losses were at $2.8 trillion • 2 survey’s in 2008, before the crash and post - crash

  5. Methodological Approach • 22,000 Americans over the age of 50 • Interviewed every 2 years • Respondents interviewed on or after October 1 (8%) reported information about their wealth and mental health in a different financial climate than those prior to October 1. • 2008 stock market crash acted as exogenous shock

  6. Descriptive Statistics for Methodological Approach

  7. Empirical Data • Declines of 81,000 to respondents with stock /IRA wealth • No significant changes in wealth for respondents without stocks • Top and bottom half of stock • Top highly affected ($223,581) • Low stock ($55,413) • Sample sizes were reduced • Foreclosure crisis

  8. Stock holders and mental health • Wealthier stock holders reported more depressive symptoms • Less wealthy half of stockholders reported significantly lower depressive symptoms • Very little clinical evidence • Increased feeling of being depressed from 16.6% to 50% • Stock holders reported significantly worse self rated health post – crash

  9. Antidepressant uses • Antidepressant usage increased post crash • 35% up from 17.6% by the wealthier half of stock holders • Bradford and Lastrapes (2013) – increase in antidepressants decrease in mental office visits • Increase in prescription drugs

  10. Conclusions • Previous studies focused on mortality • New evidence that the stock market crash in 2008 effects subjective measures of health • People who lost greater than $250,000 had nearly 50% increase in feeling depressed • 35% increase of taking antidepressants • 20% reduction in reporting excellent health

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