Poverty, Depression, and Anxiety: Causal Evidence and Mechanisms

Matthew W. Ridley, Gautam Rao, Frank Schilbach, Vikram H. Patel

NBER Working Paper No. 27157
Issued in May 2020
NBER Program(s):Development Economics, Health Care, Health Economics

Why are people living in poverty disproportionately affected by mental illness? We review the interdisciplinary evidence of the bi-directional causal relationship between poverty and common mental illnesses — depression and anxiety — and the underlying mechanisms. Research shows that mental illness reduces employment and therefore income and that psychological interventions generate economic gains. Similarly, negative economic shocks cause mental illness, and anti-poverty programs such as cash transfers improve mental health. A crucial next step toward the design of effective policies is to better understand the mechanisms underlying these causal effects.

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Acknowledgments

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Document Object Identifier (DOI): 10.3386/w27157