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Depression for Economists

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  • Jonathan de Quidt
  • Johannes Haushofer

Abstract

Major depressive disorder (MDD) is one of the most prevalent mental illnesses worldwide. Existing evidence suggests that it has both economic causes and consequences, such as unemployment. However, depression has not received significant attention in the economics literature. In this paper, we present a simple model which predicts the core symptoms of depression from economic primitives, i.e. beliefs. Specifically, we show that when exogenous shocks cause an agent to have pessimistic beliefs about the returns to her effort, this agent will exhibit depressive symptoms such undereating or overeating, insomnia or hypersomnia, and a decrease in labor supply. When these effects are strong enough, they can generate a poverty trap. We present descriptive evidence that illustrates the predicted relationships.

Suggested Citation

  • Jonathan de Quidt & Johannes Haushofer, 2016. "Depression for Economists," NBER Working Papers 22973, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22973
    Note: DEV EH
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • I1 - Health, Education, and Welfare - - Health
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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