Dips in Stock Market Linked to Hospitalizations for Mental Disorders

As stock prices drop, hospitalizations for mental disorders rise, according to new research.

Researchers combed through data on daily hospitalizations for mental disorders in Taiwan across 4,000 days between 1998 and 2009. Their analysis indicated that a 1,000-point fall in the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) correlated with a 4.71 percent daily increase in hospitalizations for mental disorders.

On a daily basis, a drop in the stock price index was significantly tied to increased hospital visits for mental disorders. According to the press release, a 1 percent drop in the TAIEX correlated with a 0.36 percent increase in hospitalization for mental illness on the same day.

When stock prices dropped on consecutive days, the results were compounded: if prices fell for 5 days in a row there was a 1.6 percent increase in hospitalizations for mental illness on the fifth day.

The correlation was significant in both genders, however the results were more pronounced in men. Daily changes had a significant effect on the 35-54 age group, while consecutive changes significantly affected the 45-54 age group.

This research is the first of its kind to investigate the relationship between market volatility and mental disorder prevalence. The results from the study, led by Chung-Liang Lin at Dong Hwa University and Chin-Shyan Chen and Tsai-Ching Liu at Taipei University, suggest that middle-aged men are particularly at risk when the TAIEX drops.

In the study, published in Health Policy and Planning, the stock market was used as a proxy for changes in economic conditions for the population as a whole.

"The stock market became the most watched indicator for much of the economic recession. Drops in the value of stocks can, and often do, announce a reduction in wealth and the multiplication of business failures with consequential pay cuts or layoffs," said Lin. "Our results suggest that, if someone is undergoing stressful and depressed conditions or has a mental illness, they should be encouraged to pay less attention to daily stock market movements, particularly middle-aged people who are suffering various pressures coming from job security, family and investments."

Changes to stock market prices effect a wide variety of factors which could influence mental disorder hospitalization, and this type of hospitalization can have many causes. The study was unable to isolate the mechanism influencing hospital visits, and only observed a temporal relationship between TAIEX changes and mental disorder hospitalization.

The press release concludes by stating: "The authors were unable to analyse the impacts of socio-economic and behavioral factors (such as education, employment, smoking) on mental disorder hospitalizations."