Targeting mental wellness: Does China's multifaceted poverty alleviation policy bear fruit?

This study examines the determinants of mental health among impoverished individuals through the lens of China's Targeted Poverty Alleviation (TPA) policy, a government-led, nationwide, precisely targeted, multifaceted anti-poverty initiative. By employing a methodology of difference-in-differences and utilizing nationally representative data from the China Family Panel Studies, we find that the TPA policy significantly improves mental health among targeted populations. The results remain robust across various robustness checks, underscoring the reliability of our estimates. Heterogeneous analysis indicates that the effects of the TPA policy are particularly substantial for more vulnerable groups, including women, younger individuals, those with lower education levels, and those living in rural regions. Increased labor force participation, augmented household income and expenditure, improved access to healthcare and education, narrowed income disparities, promoted social mobility, and enhanced confidence and trust are found to be the underlying mechanisms. A back-of-the-envelope cost–benefit analysis indicates that the TPA's return on investment from mental health improvements alone is about 5.76 RMB gained per 1 RMB.