Mental Health and Economic Outcomes

Below is a set of papers that I have worked on with many students and colleagues over the last decade or so, examining the link between mental health and economic outcomes over the life-course.  More generally, the area of mental health and economics has grown substantially in the last number of years, and the topic is well represented across Departments at LSE, including in the Department of Psychological and Behavioural Science.

Lades, L.K., Laffan, K., Daly, M. and Delaney, L. (2020), Daily emotional well‐being during the COVID‐19 pandemic. Br J Health Psychol.

The COVID‐19 outbreak has become one of the largest public health crises of our time. Governments have responded by implementing self‐isolation and physical distancing measures that have profoundly impacted daily life throughout the world. In this study, we aimed to investigate how people experience the activities, interactions, and settings of their lives during the pandemic. The sample (N = 604) was assessed in Ireland on the 25 March 2020, following the closure of schools and non‐essential businesses. We examined within‐person variance in emotional well‐being and how people spend their time. We found that while most time was spent in the home (74%), time spent outdoors (8%) was associated with markedly raised positive affect and reduced negative emotions. Exercising, going for walks, gardening, pursuing hobbies, and taking care of children were the activities associated with the greatest affective benefits. Home‐schooling children and obtaining information about COVID‐19 were ranked lowest of all activities in terms of emotional experience. These findings highlight activities that may play a protective role in relation to well‐being during the pandemic, the importance of setting limits for exposure to COVID‐19‐related media coverage, and the need for greater educational supports to facilitate home‐schooling during this challenging period.

Arulsamy, K., & Delaney, L. (2020). The Impact of Automatic Enrolment on the Mental Health Gap in Pension Participation: Evidence from the UK (Geary Institute Working Paper).


A large body of evidence shows that individuals with poor mental health have lower income over the lifespan but a dearth of evidence exists on how poor mental health affects savings behaviour. In this paper, we provide novel evidence of a mental health gap in pension participation in the UK using nationally representative longitudinal data from Understanding Society (UKHLS). Beginning in 2012, the UK government introduced automatic enrolment enabling us to assess the impact of one of the largest pension policy reforms in the world on this mental health gap. We measure mental health using the General Health Questionnaire (GHQ-12) which is a commonly used tool for measuring psychological distress. Prior to automatic enrolment, we find that male private sector employees with poor mental health are 3.2 percentage points less likely to participate in a workplace pension scheme while female private sector employees with poor mental health are 2.6 percentage points less likely to participate in a workplace pension scheme after controlling for key observables including age, education, race, marital status, number of children, occupation type, industry type, presence of a physical health condition and cognitive ability. The implementation of automatic enrolment completely removes the mental health gap in pension participation. By documenting the impact of automatic enrolment on the mental health gap in pension participation, we provide additional support for automatic enrolment policies which have already been shown to reduce gaps in pension participation among female and low income employees.

Mousteri, V., Daly, M., & Delaney, L. (2020). Underemployment and psychological distress: Propensity score and fixed effects estimates from two large UK samples. Social Science & Medicine, 244, 112641.


Background: The share of workers who work part-time because full-time jobs are not available remains larger compared to the period prior to the 2008 crisis. For part-time workers, being available to work more hours than offered may have negative mental health implications.

Method: Drawing on two nationally representative British surveys, we tested whether working less than 30 hours per week while preferring to work longer hours (underemployment) is associated with increased psychological distress. Distress was assessed using responses to the 12-item General Health Questionnaire in both samples.

Results: In the National Child Development Study (N = 6,295), propensity score estimates indicated that the hours-underemployed workers experienced higher levels of psychological distress (β = 0.25, p <0.001) than full-time workers matched on observable characteristics, including prior distress levels. Fixed effects estimates using 18 years of the British Household Panel Survey (N = 8,665) showed that transitioning from full-time employment to underemployment predicted an increase in distress levels (β = 0.19, p <0.01). Conversely, transitioning from underemployment to full-time employment forecasted a reduction in distress (β = -0.18, p <0.001). On average, job earnings and perceptions of job security explained a small (≈ 10%) portion of the potential psychological impact of hours-underemployment.

Conclusions: These findings highlight the possibility that underemployment among part-time workers may have detrimental psychological consequences. Policy interventions geared towards improving career opportunities for part-time workers would potentially ameliorate losses in psychological well-being experienced by this group.

Mousteri, V., Daly, M., Delaney, L., Tynelius, P., & Rasmussen, F. (2019). Adolescent mental health and unemployment over the lifespan: Population evidence from Sweden. Social Science & Medicine, 222, 305-314.


Rationale: Symptoms of mental health problems have been shown to predict adverse labour market outcomes including unemployment, but no studies have used sibling models to examine the relationship between clinically diagnosed psychiatric conditions in adolescence and subsequent unemployment.

Objective: This study used extensive Swedish registry data to investigate the link between psychiatric conditions diagnosed during military conscription and unemployment over two decades. Further, we identified whether this relation was amplified during an economic downturn and tested whether it was affected by adjustment for unobserved family characteristics using sibling fixed-effects models.

Method: Psychiatric conditions were diagnosed by psychologists and psychiatrists at military conscription in sample of 929,191 Swedish men (mean age = 18.4 years) between 1969 and 1989. The average number of days unemployed per year was observed from 1992 to 2012, using the records of the Swedish Public Employment Services.

Results: After adjustment for physical health and childhood socioeconomic status those diagnosed with any psychiatric condition experienced approximately an additional 10 days per year unemployment compared to others. Alcohol (16 days unemployment) and other substance use disorders (17 days) were the strongest predictors of exposure to future unemployment, followed by personality disorders (10 days), neurotic and adjustment conditions (nine days), and depressive disorders (six days). Family background factors accounted for approximately half of the observed relationship between mental health conditions and unemployment. Psychiatric conditions interacted with macroeconomic conditions such that those with pre-existing alcohol-related, and neurotic and adjustment disorders were disproportionately more likely to become unemployed following the 1990s crisis in Sweden.

Conclusions: Adolescent mental health conditions forecast an elevated risk of unemployment, which endures over the life course and is amplified in times of economic uncertainty. Investment in youth mental health services and alcohol and substance use prevention programs may yield economic benefits by reducing unemployment.

Howley, P., Waqas, M., Moro, M., Delaney, L., & Heron, T. (2019). It’s Not All about the Economy Stupid! Immigration and Subjective Well-Being in England. Work, Employment and Society.

While much is known regarding the effects of immigration for objective outcomes, relatively little is known regarding the effects for perceived well-being. By exploiting spatial and temporal variation in the net-inflows of foreign-born individuals across local areas in England, we examine the relationship between immigration and natives’ subjective well-being as captured by the General Health Questionnaire (GHQ). We find small negative effects overall but that an analysis of the main effects masks significant differences across subgroups, with relatively older individuals, those with below-average household incomes, the unemployed and finally those without any formal educational qualifications experiencing much more substantive well-being losses than others. These observed well-being differentials are congruent with voting patterns evident in the recent UK referendum on EU membership. We put forward perceived as opposed to actual labour market competition and social identity as two potential explanations for the negative well-being impacts of immigration for natives.

Boyce, C. J., Delaney, L., & Wood, A. M. (2018). The Great Recession and subjective well-being: How did the life satisfaction of people living in the United Kingdom change following the financial crisis?. PloS one, 13(8), e0201215.


The financial crisis of 2007/08 precipitated a severe global economic downturn, typically referred to as the Great Recession. However, in the United Kingdom this period has been marked by limited change in national indicators of subjective well-being. We assessed the life satisfaction change in response to the Great Recession in a sample of British adults (N = 8,661). We first show that on average the life satisfaction change across the sample was limited. However, average effects may mask substantial amounts of heterogeneity in the data. We therefore explore beyond this average effect to determine whether there were disproportionate changes (losses and gains) in life satisfaction in key sub-groups of the population. We found that individuals experiencing unemployment, who lost income, were sick or disabled, experienced the greatest well-being reductions. Contrastingly the life satisfaction of many individuals did not greatly change following the Great Recession and for some it may have even improved. Our work highlights vulnerable groups that may need additional help during recession periods and also cautions against the over reliance on average measures of well-being.

Boyce, C. J., Delaney, L., Ferguson, E., & Wood, A. M. (2018). Central bank interest rate decisions, household indebtedness, and psychiatric morbidity and distress: Evidence from the UK. Journal of affective disorders, 234, 311-317.


Background: Central banks set economy-wide interest rates to meet exclusively economic objectives. There is a strong link between indebtedness and psychiatric morbidity at the individual level, with interest rates being an important factor determining ability to repay debt. However, no prior research has explored whether central bank interest rate changes directly influence mental health, nor whether this varies by levels of indebtedness.

Methods: We use British data (N = 93,255) to explore whether the Bank of England base-rate affected how perceived burden of non-mortgage debt (low, medium, and high) influenced psychiatric morbidity. Psychiatric morbidity was measured using the General Health Questionnaire (GHQ-12). Our primary outcome measure was a binary indicator of “psychiatric caseness” (>3 on a 0–12 scale). We also used the GHQ-12 as a continuous measure of distress.

Results: When interest rates are high (low) there is an increased (decreased) risk of psychiatric morbidity only among those with a high debt burden (b = 0.026, p =  0.02). This result was robust to alternative explanations. Thus a 1 percentage point base-rate increase is associated with a 2.6% increase that someone with a high debt burden will experience psychiatric morbidity.

Limitations: Our study uses subjective indicators of debt burden. We were unable to determine the mechanism behind our effect.

Conclusions: Changes in central bank interest rates to meet economic objectives pose a threat to mental health. Mental health support is needed for those in debt and central banks may need to consider how their decisions influence population mental health.

Mousteri, V., Daly, M., & Delaney, L. (2018). The scarring effect of unemployment on psychological well-being across Europe. Social Science Research, 72, 146-169.


Past unemployment may have a pervasive psychological impact that occurs across nations. We investigate the association between unemployment events across working life and subsequent psychological well-being across 14 European countries. Additionally, we consider the influence of between-country differences in labour market institutions and conditions on the cross-country well-being effects of unemployment. Data detailing life-long employment trajectories and contemporary life conditions are drawn from the Survey of Health, Ageing and Retirement in Europe. The well-being impact of unemployment is modeled using linear, multi-level specifications. Each six-month spell of past unemployment is found to predict reduced quality of life and life satisfaction after the age of 50, having adjusted for a broad range of individual and country-specific covariates. In contrast, the impact of past unemployment on depression is explained by individual demographic factors. We identify the first comparative long-term evidence that unemployment welfare scarring may be a broad, international phenomenon.

Egan, M., Daly, M., & Delaney, L. (2018). Childhood Psychological Predictors of Lifelong Economic Outcomes. In R. Ranyard (Ed.). Economic Psychology. John Wiley & Sons.

Which psychological characteristics help children become economically successful adults? This is a question of interest to parents, governments and academics all over the world. Parents invest time, energy and money in raising their children, partly with the goal of fostering qualities which will help them succeed in life. Governments structure health and education policies to help children maximize their potential, and academics study the characteristics in childhood which lead to success in school and the labour market.

Doyle O, Delaney L, O'Farrelly C, Fitzpatrick N, Daly M. Can Early Intervention Improve Maternal Well-Being? Evidence from a Randomized Controlled Trial. PLoS One. 2017;12(1):e0169829.


This study estimates the effect of a targeted early childhood intervention program on global and experienced measures of maternal well-being utilizing a randomized controlled trial design. The primary aim of the intervention is to improve children’s school readiness skills by working directly with parents to improve their knowledge of child development and parenting behavior. One potential externality of the program is well-being benefits for parents given its direct focus on improving parental coping, self-efficacy, and problem solving skills, as well as generating an indirect effect on parental well-being by targeting child developmental problems.

Participants from a socio-economically disadvantaged community are randomly assigned during pregnancy to an intensive 5-year home visiting parenting program or a control group. We estimate and compare treatment effects on multiple measures of global and experienced well-being using permutation testing to account for small sample size and a stepdown procedure to account for multiple testing.

The intervention has no impact on global well-being as measured by life satisfaction and parenting stress or experienced negative affect using episodic reports derived from the Day Reconstruction Method (DRM). Treatment effects are observed on measures of experienced positive affect derived from the DRM and a measure of mood yesterday.

The limited treatment effects suggest that early intervention programs may produce some improvements in experienced positive well-being, but no effects on negative aspects of well-being. Different findings across measures may result as experienced measures of well-being avoid the cognitive biases that impinge upon global assessments.

Lades, L. K., Egan, M., Delaney, L., & Daly, M. (2017). Childhood self-control and adult pension participation. Economics Letters, 161, 102-104.


Self-control problems have been proposed as a key reason for low pension saving rates, yet evidence of this link remains scarce. We test the association between childhood self-control and adult pension participation using data from 14,223 individuals from two nationally-representative British cohorts. We find that a 1 standard deviation increase in self-control predicts a 4–5 percentage point higher probability of having a pension. Mediation analysis shows that about 50–60 percent of this association is explained by the contribution of self-control to a range of factors (e.g. education, economic status, home-ownership) which are associated with pension uptake throughout adulthood.

Egan, M., Daly, M., & Delaney, L. (2016). Adolescent psychological distress, unemployment, and the Great Recession: Evidence from the National Longitudinal Study of Youth 1997. Social Science & Medicine, 156, 98-105.


Rationale: Several studies have shown a link between psychological distress in early life and subsequent higher unemployment, but none have used sibling models to account for the unobserved family background characteristics which may explain the relationship.

Objective: This paper uses the National Longitudinal Study of Youth 1997 data to examine whether adolescent psychological distress in 2000 predicts higher unemployment over 2000–11, whether this relationship changed in the period following the Great Recession, and whether it is robust to adjustment for family effects.

Methods: 7125 cohort members (2986 siblings) self-reported their mental health in 2000 and employment activities over 2000–11. This association was examined using Probit and ordinary least squares regressions controlling for intelligence, physical health, other sociodemographic characteristics and family background.

Results: After adjustment for covariates and compared to those with low distress, highly distressed adolescents were 2.7 percentage points (32%) more likely to be unemployed, 5.1 points (26%) more likely to be unemployed or out of the labor force and experienced 11 weeks (28%) more unemployment. The impact of high distress was similar to a one standard deviation decrease in intelligence, and double the magnitude of having a serious physical health problem, and these estimates were robust to adjustment for family fixed-effects. The highly distressed were also disproportionately more likely to become unemployed or exit the labor force in the years following the Great Recession.

Conclusion: These findings provide strong evidence of the unemployment penalty of early-life psychological distress and suggest that this relationship may be intensified during economic recessions. Investing in mental health in early life may be an effective way to reduce unemployment.

Daly, M., Delaney, L., Egan, M., & Baumeister, R. F. (2015). Childhood self-control and unemployment throughout the life span: Evidence from two British cohort studies. Psychological science, 26(6), 709-723.


The capacity for self-control may underlie successful labor-force entry and job retention, particularly in times of economic uncertainty. Analyzing unemployment data from two nationally representative British cohorts (N = 16,780), we found that low self-control in childhood was associated with the emergence and persistence of unemployment across four decades. On average, a 1-SD increase in self-control was associated with a reduction in the probability of unemployment of 1.4 percentage points after adjustment for intelligence, social class, and gender. From labor-market entry to middle age, individuals with low self-control experienced 1.6 times as many months of unemployment as those with high self-control. Analysis of monthly unemployment data before and during the 1980s recession showed that individuals with low self-control experienced the greatest increases in unemployment during the recession. Our results underscore the critical role of self-control in shaping life-span trajectories of occupational success and in affecting how macroeconomic conditions affect unemployment levels in the population.

Egan, M., Daly, M., & Delaney, L. (2015). Childhood psychological distress and youth unemployment: Evidence from two British cohort studies. Social Science & Medicine, 124, 11-17.


The effect of childhood mental health on later unemployment has not yet been established. In this article we assess whether childhood psychological distress places young people at high risk of subsequent unemployment and whether the presence of economic recession strengthens this relationship. This study was based on 19,217 individuals drawn from two nationally-representative British prospective cohort studies; the Longitudinal Study of Young People in England (LSYPE) and the National Child Development Study (NCDS). Both cohorts contain rich contemporaneous information detailing the participants' early life socioeconomic background, household characteristics, and physical health. In adjusted analyses in the LSYPE sample (N ¼ 10,232) those who reported high levels of distress at age 14 were 2 percentage points more likely than those with low distress to be unemployed between ages 16 and 21. In adjusted analyses of the NCDS sample (N ¼ 8985) children rated as having high distress levels by their teachers at age 7 and 11 were 3 percentage points more likely than those with low distress to be unemployed between ages 16 and 23. Our examination of the 1980 UK recession in the NCDS cohort found the difference in average unemployment level between those with high versus low distress rose from 2.6 pct points in the pre-recession period to 3.9 points in the post-recession period. These findings point to a previously neglected contribution of childhood mental health to youth unemployment, which may be particularly pronounced during times of economic recession. Our findings also suggest a further economic benefit to enhancing the provision of mental health services early in life

Delaney, L., Fernihough, A. & Smith, J.P. (2013)  Exporting Poor Health: The Irish in England. Demography 50, 2013–2035.

In the twentieth century, the Irish-born population in England has typically been in worse health than both the native population and the Irish population in Ireland, a reversal of the commonly observed healthy migrant effect. Recent birth cohorts living in England and born in Ireland, however, are healthier than the English population. The substantial Irish migrant health penalty arises principally for cohorts born between 1920 and 1960. In this article, we attempt to understand the processes that generated these changing migrant health patterns for Irish migrants to England. Our results suggest a strong role for economic selection in driving the dynamics of health differences between Irish-born migrants and white English populations.

Daly, M., & Delaney, L. (2013). The scarring effect of unemployment throughout adulthood on psychological distress at age 50: Estimates controlling for early adulthood distress and childhood psychological factors. Social Science & Medicine, 80, 19-23.


Unemployment is an established predictor of psychological distress. Despite this robust relationship, the long-term impact of unemployment on human welfare has been examined in relatively few studies. In this investigation we test the association between the life-time duration of unemployment over a 34 year period from 1974 to 2008 and psychological distress at age 50 years in a sample of 6253 British adults who took part in the National Child Development Study (NCDS). In addition to adjusting for demographic characteristics, we account for the role of childhood psychological factors, which have been shown to predict adult occupational and mental health outcomes and may determine the connection between unemployment and distress. We find that intelligence and behavioral/emotional problems at age 11 predict both unemployment and psychological distress later in life. Furthermore, as predicted, the duration of unemployment throughout adulthood was associated with elevated levels of psychological distress at age 50, after adjusting for demographic characteristics including labor force status at age 50. The emotional impact of unemployment was only marginally attenuated by the inclusion of childhood factors and early-life distress levels in the analyses. Thus, unemployment may lead to worsening distress levels that persist over time and which cannot be attributed to childhood or early-life well-being or cognitive functioning early in life. Our analysis further supports the idea of psychological scarring from unemployment and the importance of employment outcomes for adult well-being.

Delaney, L., & Smith, J. P. (2012). Childhood health: trends and consequences over the life-course. The Future of children/Center for the Future of Children, the David and Lucile Packard Foundation, 22(1), 43.


This paper documents evidence on the changing prevalence of physical and mental health conditions through the course of economic development, focusing in particular on the development of childhood health conditions in the United States. We review the evidence on the persistence of poor childhood health throughout life and the effects of early childhood physical and mental health on later-life health and economic outcomes. Finally, we examine existing evidence on the efficacy of mental health interventions in terms of promoting positive long-run life outcomes.

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