Session: Risky Behavior 1
Room: Phillips 101
Time: Tue 10:15-11:45

Presenter: Angela Fertig (University of Georgia. )

Discussant: Pinka Chatterji (University at Albany)

Abstract

This paper examines the relationship between individuals’ mental health status and their spending behavior. Compared to individuals without mental health problems, individuals with mental health problems may have higher discount rates and derive greater utility from spending (commonly referred to as ‘retail therapy’). These characteristics suggest that individuals with mental illnesses will purchase goods and services that give immediate enjoyment, sacrificing longer-term savings goals. However, mental health disorders may result in a sense of worthlessness and lethargy such that less utility is derived from spending and less energy is available for spending. Using the Panel Study of Income Dynamics, ordinary least squares and fixed effects results show that most mental illnesses reduce spending. However, the coefficients on depression indicate that compared to their non-depressed counterparts, depressed single men spend 109.4 percent more on durable goods, depressed single women spend 24.9 percent more on non-durable goods, and depressed heads of couple households spend more on food and gasoline. Thus, depression may worsen one’s economic status by increasing spending, thereby contributing to the connection between health and economic status, but other mental health conditions such as bipolar disorder and anxiety do not appear to worsen one’s economic status.

Key Terms

mental health, economic status, spending

Authors:

Angela Fertig (University of Georgia) and Arati Dahal (University of Georgia)