Why does income relate to depressive symptoms? Testing the income rank hypothesis longitudinally

Hounkpatin, Hilda, Wood, Alex M., Brown, Gordon D.A. and Dunn, Graham (2015) Why does income relate to depressive symptoms? Testing the income rank hypothesis longitudinally. Social Indicators Research, 124, 637-655. (doi:10.1007/s11205-014-0795-3).

Abstract

This paper reports a test of the relative income rank hypothesis of depression, according to which it is the rank position of an individual’s income amongst a comparison group, rather than the individual’s absolute income, that will be associated with depressive symptoms. A new methodology is developed to test between psychosocial and material explanations of why income relates to well-being. This method was used to test the income rank hypothesis as applied to depressive symptoms. We used data from a cohort of 10,317 individuals living in Wisconsin who completed surveys in 1992 and 2003. The utility assumed to arise from income was represented with a constant relative risk aversion function to overcome limitations of previous work in which inadequate specification of the relationship between absolute income and well-being may have inappropriately favoured relative income specifications. We compared models in which current and future depressive symptoms were predicted from: (a) income utility alone, (b) income rank alone, (c) the transformed difference between the individual’s income and the mean income of a comparison group and (d) income utility, income rank and distance from the mean jointly. Model comparison overcomes problems involving multi-collinearity amongst the predictors. A rank-only model was consistently supported. Similar results were obtained for the association between depressive symptoms and wealth and rank of wealth in a cohort of 32,900 British individuals who completed surveys in 2002 and 2008. We conclude that it is the rank of a person’s income or wealth within a social comparison group, rather than income or wealth themselves or their deviations from the mean within a reference group, that is more strongly associated with depressive symptoms.

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Contributors

Author: Hilda Hounkpatin

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