IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

A lifecycle perspective of stock market performance and wellbeing

Listed author(s):
  • Frijters, Paul
  • Johnston, David W.
  • Shields, Michael A.
  • Sinha, Kompal

We estimate the effect of stock market fluctuations on subjective wellbeing and mental health using Australian survey data over the period 2001–2012, which includes the global financial crisis. A particular innovation of the paper is the use of three satisfaction measures – overall, financial, employment – and the use of a stylised lifecycle investment model. These features, coupled with a robust identification strategy based on comparing survey respondents interviewed in the same quarter and location, allow us to better understand individual reactions to stock market changes. We find that stock market increases lead to a significant but modest improvements in life satisfaction and mental health. This effect is driven by young and middle-aged males, and is stronger for those with direct exposure to the stock market. For young cohorts, the stock market index acts as a leading indicator of employment prospects, whilst for older cohorts it acts directly on financial satisfaction.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0167268115000384
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 112 (2015)
Issue (Month): C ()
Pages: 237-250

as
in new window

Handle: RePEc:eee:jeborg:v:112:y:2015:i:c:p:237-250
DOI: 10.1016/j.jebo.2015.02.004
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Cotti Chad & Tefft Nathan, 2011. "Decomposing the Relationship between Macroeconomic Conditions and Fatal Car Crashes during the Great Recession: Alcohol- and Non-Alcohol-Related Accidents," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-24, August.
  2. Betsey Stevenson & Justin Wolfers, 2013. "Subjective Well-Being and Income: Is There Any Evidence of Satiation?," American Economic Review, American Economic Association, vol. 103(3), pages 598-604, May.
  3. Ruhm, Christopher J., 2005. "Healthy living in hard times," Journal of Health Economics, Elsevier, vol. 24(2), pages 341-363, March.
  4. Mark P. Taylor, 2006. "Tell me why I don't like Mondays: investigating day of the week effects on job satisfaction and psychological well-being," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 169(1), pages 127-142.
  5. Anita Ratcliffe & Karl Taylor, 2015. "Who cares about stock market booms and busts? Evidence from data on mental health," Oxford Economic Papers, Oxford University Press, vol. 67(3), pages 826-845.
  6. French, Michael T. & Gumus, Gulcin, 2014. "Macroeconomic fluctuations and motorcycle fatalities in the U.S," Social Science & Medicine, Elsevier, vol. 104(C), pages 187-193.
  7. Angus Deaton, 2008. "Income, Health, and Well-Being around the World: Evidence from the Gallup World Poll," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 53-72, Spring.
  8. Dubois, M. & Louvet, P., 1996. "The day-of-the-week effect: The international evidence," Journal of Banking & Finance, Elsevier, vol. 20(9), pages 1463-1484, November.
  9. repec:pri:cheawb:case_paxson_economic_status_paper is not listed on IDEAS
  10. Beomsoo Kim & Christopher J. Ruhm, 2012. "Inheritances, health and death," Health Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 127-144, February.
  11. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 1-102.
  12. Christopher Ruhm, 2007. "A healthy economy can break your heart," Demography, Springer;Population Association of America (PAA), vol. 44(4), pages 829-848, November.
  13. Michaud, Pierre-Carl & van Soest, Arthur, 2008. "Health and wealth of elderly couples: Causality tests using dynamic panel data models," Journal of Health Economics, Elsevier, vol. 27(5), pages 1312-1325, September.
  14. Julie Agnew, 2013. "Australia’s Retirement System: Strengths, Weaknesses, and Reforms," Issues in Brief ib2013-5, Center for Retirement Research.
  15. Frijters, Paul, 2000. "Do individuals try to maximize general satisfaction?," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 281-304, June.
  16. Jérôme Adda & James Banks & Hans-Martin von Gaudecker, 2009. "The Impact of Income Shocks on Health: Evidence from Cohort Data," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1361-1399, December.
  17. Paul Frijters & David W. Johnston & Michael A. Shields, 2011. "Life Satisfaction Dynamics with Quarterly Life Event Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 190-211, March.
  18. Christopher J. Ruhm, 2000. "Are Recessions Good for Your Health?," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 617-650.
  19. Frijters, Paul & Johnston, David W. & Lordan, Grace & Shields, Michael A., 2013. "Exploring the relationship between macroeconomic conditions and problem drinking as captured by Google searches in the US," Social Science & Medicine, Elsevier, vol. 84(C), pages 61-68.
  20. Ásgeirsdóttir, Tinna Laufey & Corman, Hope & Noonan, Kelly & Ólafsdóttir, Þórhildur & Reichman, Nancy E., 2014. "Was the economic crisis of 2008 good for Icelanders? Impact on health behaviors," Economics & Human Biology, Elsevier, vol. 13(C), pages 1-19.
  21. Gardner, Jonathan & Oswald, Andrew J., 2007. "Money and mental wellbeing: A longitudinal study of medium-sized lottery wins," Journal of Health Economics, Elsevier, vol. 26(1), pages 49-60, January.
  22. John Quiggin, 2009. "Six Refuted Doctrines," Economic Papers, The Economic Society of Australia, vol. 28(3), pages 239-248, September.
  23. Angus Deaton, 2012. "The financial crisis and the well-being of Americans," Oxford Economic Papers, Oxford University Press, vol. 64(1), pages 1-26, January.
  24. Eckel, Catherine C. & Grossman, Philip J., 2008. "Men, Women and Risk Aversion: Experimental Evidence," Handbook of Experimental Economics Results, Elsevier.
  25. Meer, Jonathan & Miller, Douglas L. & Rosen, Harvey S., 2003. "Exploring the health-wealth nexus," Journal of Health Economics, Elsevier, vol. 22(5), pages 713-730, September.
  26. repec:pri:cheawb:deaton_income_health_and_wellbeing_around_the_world_evidence_%20from_gall is not listed on IDEAS
  27. Richard Finlay, 2012. "The Distribution of Household Wealth in Australia: Evidence from the 2010 HILDA Survey," RBA Bulletin, Reserve Bank of Australia, pages 19-27, March.
  28. Ulrike Malmendier & Stefan Nagel, 2011. "Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 373-416.
  29. Foster, Gigi & Frijters, Paul & Johnston, David W., 2012. "The triumph of hope over disappointment: A note on the utility value of good health expectations," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 206-214.
  30. Murgea Aurora & Reisz Robert D., 2013. "Does the Market Make us Happy? The Stock Market and Well-being," Economia politica, Società editrice il Mulino, issue 1, pages 69-86.
  31. Mikael Lindahl, 2005. "Estimating the Effect of Income on Health and Mortality Using Lottery Prizes as an Exogenous Source of Variation in Income," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
  32. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
  33. Brooke Helppie McFall, 2011. "Crash and Wait? The Impact of the Great Recession on the Retirement Plans of Older Americans," American Economic Review, American Economic Association, vol. 101(3), pages 40-44, May.
  34. Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Alex Rees-Jones, 2012. "What Do You Think Would Make You Happier? What Do You Think You Would Choose?," American Economic Review, American Economic Association, vol. 102(5), pages 2083-2110, August.
  35. Anne Case & Darren Lubotsky & Christina Paxson, 2002. "Economic Status and Health in Childhood: The Origins of the Gradient," American Economic Review, American Economic Association, vol. 92(5), pages 1308-1334, December.
  36. Macy, Jonathan T. & Chassin, Laurie & Presson, Clark C., 2013. "Predictors of health behaviors after the economic downturn: A longitudinal study," Social Science & Medicine, Elsevier, vol. 89(C), pages 8-15.
  37. Péter Hudomiet & Gábor Kézdi & Robert J. Willis, 2011. "Stock market crash and expectations of American households," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 393-415, April.
  38. Tefft, Nathan, 2012. "Mental health and employment: The SAD story," Economics & Human Biology, Elsevier, vol. 10(3), pages 242-255.
  39. Frijters, Paul & Liu, Amy Y.C. & Meng, Xin, 2012. "Are optimistic expectations keeping the Chinese happy?," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 159-171.
  40. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
  41. Carol Graham, 2011. "Adaptation amidst Prosperity and Adversity: Insights from Happiness Studies from around the World," World Bank Research Observer, World Bank Group, vol. 26(1), pages 105-137, February.
  42. McInerney, Melissa & Mellor, Jennifer M. & Nicholas, Lauren Hersch, 2013. "Recession depression: Mental health effects of the 2008 stock market crash," Journal of Health Economics, Elsevier, vol. 32(6), pages 1090-1104.
  43. Frijters, Paul & Haisken-DeNew, John P. & Shields, Michael A., 2005. "The causal effect of income on health: Evidence from German reunification," Journal of Health Economics, Elsevier, vol. 24(5), pages 997-1017, September.
  44. Grinblatt, Mark & Keloharju, Matti, 2000. "The investment behavior and performance of various investor types: a study of Finland's unique data set," Journal of Financial Economics, Elsevier, vol. 55(1), pages 43-67, January.
  45. Ed Diener & Ronald Inglehart & Louis Tay, 2013. "Theory and Validity of Life Satisfaction Scales," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 112(3), pages 497-527, July.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:112:y:2015:i:c:p:237-250. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.