Financial Troubles and Mental Health

By Mark Kattenberg, Anne-Fleur Roos & Jurre Thiel – Netherlands Bureau for Economic Policy Analysis (CPB)

Qualitative evidence suggests that financial troubles cause or deepen mental health problems, but quantitative evidence is scarce. The available evidence suggests that problematic debt increase mental health problems (Roos et al, 2021), but we do not know whether people are equally affected by problematic debts or whether some suffer more than others. Following Roos (2021), the authors use nationwide individual-level register data from the Netherlands for the years 2011-2015 to study the relationship between problematic debts and mental health and use a difference-in-differences approach with individual fixed effects for identification. To detect heterogeneity in the effect of problematic debts on mental health, they modify the causal forest algorithm to incorporate time and individual fixed effects.

The researchers have transferred our algorithm and (confidential) data to the OSSC. This allowed them to run the algorithm on millions on observations. The option to do analysis in parallel did speed up the computation time considerably. The first results show that that the effect is homogeneous, which rejects the null hypothesis. 

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