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Who Cares about Stock Market Booms and Busts? Evidence from Data on Mental Wellbeing

  • Anita Ratcliffe

    ()

    (Department of Economics,)

  • Karl Taylor

    ()

    (Department of Economics, The University of Sheffield)

This paper investigates the correlation between stock prices and mental wellbeing, exploiting the availability of interview dates in the British Household Panel Survey to match the level and changes in the FTSE 100 stock price index to respondents over the period 1991-2008. We present evidence that the level, 6 month and yearly changes in the price index are associated with better mental wellbeing while greater uncertainty, proxied by volatility in the price index, is associated with poorer mental wellbeing. Moreover, using several proxies of stockholder status, we find little evidence that this association is confined to holders of equity-based assets, which is inconsistent with a pure wealth effect.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2012_021.html
File Function: Revised version, 2013
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2012021.

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Length: 30 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:shf:wpaper:2012021
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  1. Michael D. Hurd & Maarten van Rooij & Joachim Winter, 2010. "Stock Market Expectations of Dutch Households," NBER Working Papers 16464, National Bureau of Economic Research, Inc.
  2. 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.
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  8. Gardner, Jonathan & Oswald, Andrew J., 2006. "Money and Mental Wellbeing : A Longitudinal Study of Medium-Sized Lottery Wins," The Warwick Economics Research Paper Series (TWERPS) 754, University of Warwick, Department of Economics.
  9. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
  10. 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.
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  13. Robert J. Shiller, 1984. "Stock Prices and Social Dynamics," Cowles Foundation Discussion Papers 719R, Cowles Foundation for Research in Economics, Yale University.
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  15. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
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  18. repec:pri:cepsud:125krueger is not listed on IDEAS
  19. Roberts, Jennifer & Hodgson, Robert & Dolan, Paul, 2011. "“It's driving her mad”: Gender differences in the effects of commuting on psychological health," Journal of Health Economics, Elsevier, vol. 30(5), pages 1064-1076.
  20. Robert J. Shiller, 1984. "Stock Prices and Social Dynamics," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 15(2), pages 457-510.
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