Study Finds Suicides Rise When Stock Markets Plunge
Jakarta, CNBC Indonesia — Stock market crashes do more than cause financial losses; they are also associated with rising suicide rates. An international study found that suicides tend to increase when stock indices experience sharp declines.
According to The Conversation, the study, which covered 36 countries over several decades, found that suicide rates rose in years when markets fell significantly and remained elevated into the following year. The findings suggest that the impact of a stock market crash on public mental health can last well beyond the period of market decline.
The study was conducted by Brendan John Lambe, an associate professor of finance at De Montfort University, and Tomasz Piotr Wisniewski, a professor of finance at The Open University. They explained that people’s financial circumstances are linked to the stock market, directly through investments and indirectly through pension funds.
As a result, a stock market crash can affect the wider public, not just investors. The researchers also ran a simulation to estimate the number of suicides associated with the 2008 global financial crisis.
They estimated that the sharp decline in share values was associated with an additional 6,566 suicides across the countries studied during 2008–09. This figure is an estimate based on the study’s model, not a count of cases for which the cause has been individually confirmed. The researchers also found an association between stock market losses and rising suicide rates among both men and women.
To ensure the findings were not simply driven by other factors, the researchers accounted for a range of social and economic conditions associated with suicide risk. These included unemployment, falling gross domestic product (GDP), high inflation, family instability, alcohol consumption, population density and women’s participation in the labour force.
Even after taking these factors into account, the study found that stock market declines remained independently associated with rising suicide rates.
The link between financial circumstances and mental health
The researchers also examined the relationship between money, happiness and mental health. Previous studies have found that people in more prosperous countries tend to report higher levels of happiness.
However, rising national incomes over time do not always lead to greater public happiness. This phenomenon is known as the Easterlin paradox.
For example, research on lottery winners in the UK found that they tended to report improved mental wellbeing after receiving large sums of money. However, this additional wealth could also be accompanied by increased alcohol consumption and other risky behaviour, potentially reducing its benefits to health.
Meanwhile, another study of the 2008 global financial crisis found that falling house prices to below the value of outstanding mortgages could increase homeowners’ psychological distress. This was associated with more cases of depression and greater use of medication to cope with it. The researchers said these findings show that changes in financial circumstances can affect a person’s mental health.