An econometric assessment of the effect of mental illness on household spending behavior
This paper examines the relationship between individuals’ mental health status and their spending behavior. Compared to individuals without mental health problems, individuals with mental health problems may have higher discount rates and derive greater utility from spending (i.e., retail therapy). If the mentally ill have these characteristics, we would expect them to purchase goods and services that give immediate enjoyment, sacrificing longer-term savings goals. However, mental health disorders may result in a sense of worthlessness and lethargy such that less utility is derived from spending and less energy is available for spending, which would give us the opposite prediction. Using the Panel Study of Income Dynamics, we generally find a negative effect of mental illness on household spending, although the specific effects vary by the measure of mental illness, by the expenditure category, and by gender and couple status. Of particular concern, single and married women with mental illness reduce spending on education, which suggests a long-term financial cost of mental illness. In addition, we find some evidence of retail therapy with respect to a mental health screen for single and married women and with respect to a mental diagnosis for married men.
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.
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.
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.:
- Frederick J. Zimmerman & Wayne Katon, 2005. "Socioeconomic status, depression disparities, and financial strain: what lies behind the income-depression relationship?," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1197-1215.
- Lillard, Lee A & Weiss, Yoram, 1997.
"Uncertain Health and Survival: Effects on End-of-Life Consumption,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 15(2), pages 254-68, April.
- Lillard, L.A. & Weiss, Y., 1996. "Uncertain Health and Survival: Efefcts on End-of-Life Consumption," Papers 7-96, Tel Aviv.
- Linda Waite, 1995. "Does marriage matter?," Demography, Springer, vol. 32(4), pages 483-507, November.
- David M. Cutler & Angus S. Deaton & Adriana Lleras-Muney, 2006.
"The Determinants of Mortality,"
- Cutler, David & Lleras-Muney, Adriana & Deaton, Angus, 2006. "The Determinants of Mortality," Scholarly Articles 2640588, Harvard University Department of Economics.
- David Cutler & Angus Deaton & Adriana Lleras-Muney, 2005. "The Determinants of Mortality," Working Papers 235, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
- David M. Cutler & Angus S. Deaton & Adriana Lleras-Muney, 2006. "The Determinants of Mortality," NBER Working Papers 11963, National Bureau of Economic Research, Inc.
- Martin Browning, 1994.
"The Saving Behaviour of a Two Person Household,"
Department of Economics Working Papers
1994-01, McMaster University.
- Gary S. Becker & Casey B. Mulligan, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 729-758.
- Finkelstein, Amy & Luttmer, Erzo F. P. & Notowidigdo, Matthew J., 2008.
"What Good Is Wealth without Health? The Effect of Health on the Marginal Utility of Consumption,"
Working Paper Series
rwp08-036, Harvard University, John F. Kennedy School of Government.
- Amy Finkelstein & Erzo F. P. Luttmer & Matthew J. Notowidigdo, 2013. "What Good Is Wealth Without Health? The Effect Of Health On The Marginal Utility Of Consumption," Journal of the European Economic Association, European Economic Association, vol. 11, pages 221-258, 01.
- Amy Finkelstein & Erzo F.P. Luttmer & Matthew J. Notowidigdo, 2008. "What Good Is Wealth Without Health? The Effect of Health on the Marginal Utility of Consumption," NBER Working Papers 14089, National Bureau of Economic Research, Inc.
- Susan L. Ettner & Richard G. Frank & Ronald C. Kessler, 1997. "The Impact of Psychiatric Disorders on Labor Market Outcomes," ILR Review, Cornell University, ILR School, vol. 51(1), pages 64-81, October.
- Fersterer, Josef & Winter-Ebmer, Rudolf, 2000.
"Smoking, Discount Rates, and Returns to Education,"
IZA Discussion Papers
126, Institute for the Study of Labor (IZA).
- Fletcher Jason, 2009. "All in the Family: Mental Health Spillover Effects between Working Spouses," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-21, February.
- Kirchler, Erich & Hoelzl, Erik & Kamleitner, Bernadette, 2008. "Spending and credit use in the private household," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(2), pages 519-532, April.
- Gronau, Reuben, 1977.
"Leisure, Home Production, and Work-The Theory of the Allocation of Time Revisited,"
Journal of Political Economy,
University of Chicago Press, vol. 85(6), pages 1099-1123, December.
- Reuben Gronau, 1976. "Leisure, Home Production and Work--The Theory of The Allocation of Time Revisited," NBER Working Papers 0137, National Bureau of Economic Research, Inc.
- Viscusi, W Kip & Evans, William N, 1990. "Utility Functions That Depend on Health Status: Estimates and Economic Implications," American Economic Review, American Economic Association, vol. 80(3), pages 353-74, June.
- Shelly Lundberg & Richard Startz & Steven Stillman, 2001.
"The Retirement-Consumption Puzzle: A Marital Bargaining Approach,"
01-04, RAND Corporation Publications Department.
- Lundberg, Shelly & Startza, Richard & Stillman, Steven, 2003. "The retirement-consumption puzzle: a marital bargaining approach," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1199-1218, May.
- Susan L. Ettner & Richard G. Frank & Ronald C. Kessler, 1997. "The Impact of psychiatric disorders on labor market outcomes," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(1), pages 64-81, October.
- Read, Daniel & Read, N. L., 2004. "Time discounting over the lifespan," Organizational Behavior and Human Decision Processes, Elsevier, vol. 94(1), pages 22-32, May.
- Trostel, Philip A & Taylor, Grant A, 2001. "A Theory of Time Preference," Economic Inquiry, Western Economic Association International, vol. 39(3), pages 379-95, July.
- Attila Cseh*, 2008. "The Effects of Depressive Symptoms on Earnings," Southern Economic Journal, Southern Economic Association, vol. 75(2), pages 383-409, October.
- Li-Wei Chao & Helena Szrek & Nuno Sousa Pereira & Mark V. Pauly, 2009.
"Time preference and its relationship with age, health, and survival probability,"
Judgment and Decision Making,
Society for Judgment and Decision Making, vol. 4(1), pages 1-19, February.
- Li-Wei Chao & Helena Szrek & Nuno Sousa Pereira & Mark V. Pauly, 2007. "Time Preference and Its Relationship with Age, Health, and Survival Probability," CEF.UP Working Papers 0706, Universidade do Porto, Faculdade de Economia do Porto.
- Bretteville-Jensen, A. L., 1999. "Addiction and discounting1," Journal of Health Economics, Elsevier, vol. 18(4), pages 393-407, August.
- Bartel, Ann & Taubman, Paul, 1986. "Some Economic and Demographic Consequences of Mental Illness," Journal of Labor Economics, University of Chicago Press, vol. 4(2), pages 243-56, April.
- Case, Anne & Fertig, Angela & Paxson, Christina, 2005. "The lasting impact of childhood health and circumstance," Journal of Health Economics, Elsevier, vol. 24(2), pages 365-389, March.
- Bretteville-Jensen, A.L., 1999. "Addiction and Discounting," Norway; Department of Economics, University of Bergen 198, Department of Economics, University of Bergen.
- James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
- Susan L. Ettner & Richard G. Frank & Ronald C. Kessler, 1997. "The Impact of Psychiatric Disorders on Labor Market Outcomes," NBER Working Papers 5989, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:37:y:2013:i:c:p:18-33. 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: (Zhang, Lei)
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.