Who Cares about Stock Market Booms and Busts? Evidence from Data on Mental Wellbeing

Anita Ratcliffe, Karl Taylor

Abstract

This paper investigates the correlation between stock prices and mental wellbeing, exploiting the availability of interview dates in the British Household Panel Survey to match the level and changes in the FTSE 100 stock price index to respondents over the period 1991-2008. We present evidence that the level, 6 month and yearly changes in the price index are associated with better mental wellbeing while greater uncertainty, proxied by volatility in the price index, is associated with poorer mental wellbeing. Moreover, using several proxies of stockholder status, we find little evidence that this association is confined to holders of equity-based assets,
which is inconsistent with a pure wealth effect.