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Poverty, Depression, and Anxiety: Causal Evidence and Mechanisms


  • Matthew W. Ridley
  • Gautam Rao
  • Frank Schilbach
  • Vikram H. Patel


Why are people living in poverty disproportionately affected by mental illness? We review the interdisciplinary evidence of the bi-directional causal relationship between poverty and common mental illnesses — depression and anxiety — and the underlying mechanisms. Research shows that mental illness reduces employment and therefore income and that psychological interventions generate economic gains. Similarly, negative economic shocks cause mental illness, and anti-poverty programs such as cash transfers improve mental health. A crucial next step toward the design of effective policies is to better understand the mechanisms underlying these causal effects.

Suggested Citation

  • Matthew W. Ridley & Gautam Rao & Frank Schilbach & Vikram H. Patel, 2020. "Poverty, Depression, and Anxiety: Causal Evidence and Mechanisms," NBER Working Papers 27157, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27157
    Note: DEV HC HE

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    Cited by:

    1. Giuntella, Giovanni & Hyde, Kelly & Saccardo, Silvia & Sadoff, Sally, 2020. "Lifestyle and Mental Health Disruptions During COVID-19," SocArXiv y4xn3, Center for Open Science.
    2. Giuntella, Osea & Hyde, Kelly & Saccardo, Silvia & Sadoff, Sally, 2020. "Lifestyle and Mental Health Disruptions during COVID-19," IZA Discussion Papers 13569, Institute of Labor Economics (IZA).
    3. Lukas Kiessling & Jonathan Norris, 2020. "The long-run effects of peers on mental health," Working Papers 2006, University of Strathclyde Business School, Department of Economics.
    4. Alloush, Mo & Bloem, Jeffrey R., 2020. "Neighborhood Violence, Poverty, and Psychological Well-Being," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304341, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • I1 - Health, Education, and Welfare - - Health
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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