Who cares about stock market booms and busts? Evidence from data on mental health

This article investigates the association between stock market activity and mental well-being, exploiting the availability of interview dates in the British Household Panel Survey to match changes in the FTSE 100 stock price index to respondents over the period 1991–2008. We present evidence that annual changes in the price index are associated with better mental well-being whilst greater uncertainty, proxied by volatility in the price index, is associated with poorer mental well-being—even after controlling for macroeconomic conditions. Our findings provide support of a wealth mechanism and also suggest that the stock market is a barometer of economic prospects and/or social movements and mood.