Determinants of self-reported mental health using the British household panel survey

The study of self-reported mental health is a fairly recent area for economists, although sociologists, psychologists and public health specialists have been studying it for years. One methodological problem with earlier research is that there are many unobserved characteristics of individuals that may be correlated with self-reported mental health. Neglecting these factors may lead to biased estimates of the effects of variables such as income, education, health, etc. Panel data enables us to control for unobserved individual specific effects, whereas a cross-section study or time series study cannot.

This paper examines the determinants of self-reported mental health in UK using data from the first eight waves of the British Household Panel Survey. In particular, we are interested in assessing the effect of education on self-reported mental health which other studies have ignored.

The measure of self-reported mental health used in this paper is the General Health Questionnaire (GHQ). To account for the possible correlation between the unobserved individual effects and some explanatory variables, a Hausman Taylor's instrumental variables estimator (HT) is employed. In order to derive this estimator, one has to distinguish between variables that are correlated with the individual specific effects (endogenous) and variables which are uncorrelated with the individual specific effects (exogenous). This HT estimator also allows for estimating the parameters corresponding with time invariant variables such as education and ethnicity.

The evidence presented here confirms that mental health scores mentioned on the GHQ are significantly related to job status, age, marital status and self-assessed health status. The results also show no evidence that income impacts on self-reported mental health. Ethnicity is also found to deteriorate self-reported mental health yet the effect is not significant. The results of this paper also show that education had no significant impact on self-reported mental health. IMPLICATIONS FOR MENTAL HEALTH POLICY: Issues related to unemployment and social cohesion may be relevant factors in the prevention of mental illness. Policies aimed at improving these factors have an impact on the mental health status of society. In consideration of the evidence of gender differential in mental health, mental health policies should take into account properly this issue.

In order to draw definite conclusions, it is important to formally test the presence of attrition bias as well as expand the sample to include more waves. Still, we are concerned about the issue of weak correlation between the instruments and potential endogenous variables. Additionally, we have to bear in mind that inconsistent estimates may potentially occur if the partition of the variables in subsets of endogenous and exogenous is not correctly specified. These issues need further research. The estimation technique also presented in this paper may be applied to a wide range of health services research.