Wealth Effects or Economic Barometer: Why Do House Prices Matter for Psychological Health?

Anita Ratcliffe


This paper investigates whether house prices are linked to mental health outcomes, and
whether this association arises through wealth eff ects or whether third factors such as area
amenities or economic conditions drive both house prices and psychological health. These
alternative explanations have contrasting implications for the eff ect of house prices on the
well-being of homeowners and non-homeowners, which are exploited in the empirical analysis.
I document a positive association between house prices and the mental health of homeowners
and non-homeowners, which is not consistent with wealth e ffects. Further analysis indicates
that house prices matter via a role as an economic barometer.