Economic Shocks Increase the Likelihood of Mental Health Problems

According to research published in Social Science & Medicine, the psychological distress caused by a “wealth shock” affects mental health. Using the Panel Study of Income Dynamics (PSID), researchers analyzed longitudinal data from a nationally representative sample of 4,007 households who owned a home in 2007 and participated in three waves of the PSID, which occurred in 2007, 2009, and 2011. The authors calculated the change in housing wealth, nonhousing wealth, and net wealth while observing the status of homeowners’ mortgages during this period. The researchers looked for causal relationships between wealth shocks and the mental health of homeowners, measured using five indicators: “psychological distress, feeling depressed, self-reported health status, and clinically diagnosed onsets of high blood pressure and depression.”

The research, which builds on prior work on mental health and foreclosures, may help document the value of partnerships between mental health providers and organizations engaging with homeowners experiencing mortgage distress.

Key findings:

• Decreases in housing wealth are associated with small rises in homeowners’ psychological distress. The authors classify housing wealth as the difference between home values and remaining mortgage balances.
• Difficulties with mortgage payments make it much more likely that a homeowner will experience psychological distress, feelings of depression, or a clinical diagnosis of depression.
• Homeowners who struggle to meet mortgage obligations suffer more severe mental health consequences than homeowners experiencing a decline in housing wealth.