Healing and/or breaking? The mental health implications of repeated economic insecurity

Current literature confirms the negative consequences of contemporaneous economic insecurity for mental health, but ignores possible implications of repeated insecurity. This paper asks how much a person's history of economic insecurity matters for psychological distress by contrasting the implications of two models. Consistent with the health capital literature, the Healing model suggests psychological distress is a stock variable affected by shocks from life events, with past events having less impact than more recent shocks. Alternatively, the Breaking Point model considers that high levels of distress represent a distinct shift in life state, which occurs if the accumulation of past life stresses exceeds some critical value. Using five cycles of Canadian National Population Health Survey data (2000-2009), we model the impact of past economic insecurity shocks on current psychological distress in a way that can distinguish between these hypotheses. In our sample of 1775 males and 1883 females aged 25 to 64, we find a robust healing effect for one-time economic insecurity shocks. For males, only a recent one-time occurrence of economic insecurity is predictive of higher current psychological distress (0.19 standard deviations). Moreover, working age adults tend to recover from past accumulated experiences of economic insecurity if they were recently economically secure. However, consistent with the Breaking Point hypothesis, males experiencing three or four cycles of recent insecurity are estimated to have a level of current psychological distress that is 0.26-0.29 standard deviations higher than those who were employed and job secure throughout the same time period. We also find, consistent with other literature, distinct gender differences - for working age females, all economic insecurity variables are statistically insignificant at conventional levels. Our results suggest that although Canadians are resilient to one-time insecurity shocks, males most vulnerable to repeated bouts suffer from elevated levels of psychological distress.