Recession Depression: Physical and Mental Health Effects of the Stock Market Crash

Melissa McInerney, College of William and Mary
Jennifer Mellor, College of William and Mary
Lauren H. Nicholas, University of Michigan

While the financial consequences to American households resulting from the job losses, housing insecurity, and wealth loss characterizing the Great Recession are well known, the health and health-related outcomes are less well known. We use exogenous variation in the timing of interview dates of the 2008 Health and Retirement Study to assess the short-term impact of large wealth losses on physical and mental health American adults aged 50 and above. We compare respondents interviewed following the October, 2008 stock market crash with those interviewed before the crash. Respondents with stock market wealth interviewed right after the crash report significantly worse self-rated health than respondents interviewed pre-crash, report an additional 0.20 CESD depression symptoms (p < 0.05), and are 4 percentage points less likely to report feeling happy in the the past two weeks (p < 0.05). Future work will test the duration of these health effects and inform policy response.