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Does income deprivation affect people’s mental well-being?

Maite Blázquez Cuesta () and Santiago Budria Rodriguez ()

No 1312, Working Papers from Banco de España, Working Papers Homepage

Abstract: This paper uses panel data from the 2002-2010 waves of the German Socio-Economic Panel dataset (SOEP) to assess the impact of income deprivation upon individual mental well-being. Unobserved heterogeneity is controlled for by means of a random effects model extended to include a Mundlak term and explicit controls for the respondents’ personality traits. The paper shows that, for a given household income, a less favourable relative position in the income distribution is associated with lower mental well-being. This effect is not statistically significant among women, though. Among men, a one standard deviation increase in income deprivation is found to be as harmful as a reduction in permanent household income of almost 30%. Interestingly, this impact is found to differ among individuals endowed with different sets of non-cognitive skills. We suggest that policies, practices and initiatives aimed at improving well-being among European citizens require a better understanding of individuals’ sensitiveness to others’ income.

Keywords: mental health; random effects model; deprivation; personality traits (search for similar items in EconPapers)
JEL-codes: C23 D63 I10 I14 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013-10
New Economics Papers: this item is included in nep-hap, nep-hea and nep-ltv
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1312

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