Angelique-galespsychstats.docx

Angelique Gales BS Psychology A109 Title of the Research Author Date Published Publisher Statement of the Problem

Methodology

Findings

An economic theory of depression and its impact on health behavior and longevity Holger Strulik 25 November 2018 https://doi.org/10.1016/j.jebo.2018.11.022 • Novel theory of depression. • Combines insights from happiness research, life cycle economics, and gerontology. • Explains why depressed people consume more unhealthy goods, exercise less, and save less. • Allows quantitative analysis of depression effects on health outcomes. • Motivates income gradient in health and depression. The model is solved by applying the relaxation algorithm of Trimborn et al. (2008). The predicted life cycle choices of the non-depressed benchmark American are shown in Fig. 1 by blue (solid) lines. The targeted data points are shown by circles. The model predicts that with advancing age, the individual develops more health deficits, spends more on health, consumes less unhealthy goods, and exercises less. At age 77.1, the individual dies when the terminal condition for health deficits is reached. The life-cycle choices of non-depressed individuals are discussed in detail by Dalgaard and Strulik (2014) and Schünemann et al. (2017b). The new choice variable here is physical exercise, which declines with age since exercise becomes increasingly painful as the individual develops more health deficits. This paper introduced depression into health economic theory and evaluated its impact on life-cycle health behavior and longevity. The model captures one major symptom of depression, the reduced ability to experience pleasure. Inspired by happiness research, depression has been conceptualized as a large drop in instantaneous utility and life satisfaction (lifetime utility). Successful treatment partly restores original utility and life satisfaction. These elements have been integrated into a life-cycle model of health deficit accumulation, augmented by utility-enhancing unhealthy consumption and utility-reducing but health-enhancing physical exercise. The model explains why, as a result of reduced life satisfaction, depressed people consume more unhealthy goods, save less, invest less in their health, and exercise less. The reason for this predicted behavior is that health, aging, and longevity are endogenous in the life cycle model and depressed individuals, because of the reduced life satisfaction, have less incentive to perform healthy activities in order to prolong their life. The model generates these behavioral responses to depression without interfering with individual preferences, i.e. without assuming that, for example, depressed people prefer unhealthy goods more strongly. Instead, it is shown that it is sufficient for the predicted outcomes to assume that the depressed experience less pleasure from everything, which is modeled as a sustained drop of utility for unchanged fundamentals. The model has been calibrated to predict the life-cycle trajectories of health behavior and health outcomes for a non-depressed Reference American. Introducing depression as a 20% drop in life satisfaction rationalizes changes in

health behavior that reduce the length of life by about 4 years. Extensions of the model have shown that these results are obtained largely independently from the size of (reasonable) feedback effects of depression on labor supply and lifetime income. The timing of treatment, however, is predicted to be crucial. Delays in diagnosis or treatment lead to severe losses in health that are not fully recovered in the treatment period. The reason for this result is that the (gerontologically founded) health deficit model amplifies the late-life consequences of health shocks in early life. In the present context, this means that individuals do not manage to compensate fully for the health destroyed by unhealthy behavior during untreated depression in early adulthood. Since this study is a first attempt to discuss depression in the context of health and longevity, there are ample possibilities to further extend and refine the theory. For example, it could also be taken into account that depression has a direct biological impact on health through, for example, blood pressure, inflammation, or immune function. Because the sustained drop of utility captures in a general way the major symptom of depression (in contrast to the manipulation of specific preferences), the theory can easily be extended in various directions to investigate other potential behavioral changes caused by depression. It could thus inspire further research in health economic theory to better understand the mechanisms behind behavioral changes caused by depression. For example, future applications could investigate inferior and potentially health-damaging self-treatment of depression (by excessive alcohol consumption or illicit drug intake). This could be a particularly interesting endeavor in the context of the income gradient of longevity and limited access to insurance-covering clinical depression treatment. Such an analysis could also consider the addictive potential of the applied self-treatment, investigate the repercussions of unhealthy addiction on longevity (Strulik, 2018c), and enhance our understanding of the association between depression and addiction (Solomon, 2015). As explained in the Introduction, the assumed exogeneity of depression is a reasonable first approximation of reality and a useful device in order to identify causality. An extension, however, could discuss depression triggered by bad health and investigate the interdependence of both phenomena. In particular, chronic pain seems to be associated with depression (DePaulo and Horvitz, 2002). By integrating this feature, the proposed model of depression could establish a link between depression, use of antidepressants, and painkiller consumption, and contribute to a better understanding of the opioid epidemic.

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I would like to thank Gustav Feichtinger, Sophia Kan, Michael Kuhn, Alexia Prskawetz, Miguel Sanchez-Romero, Aida Tanios, Timo Trimborn, and two anonymous referees for helpful comments and discussion. Declarations of interest: none 1If depression would be endogenous (caused for example by deteriorating health) it could be hard or impossible to identify whether the observed change in behavior is caused by depression or by the circumstances that also triggered depression. Since the depression is the only thing that changes in the computational experiments, all elicited changes in behavior can be causally attributed to depression. While the utility drop from depression is treated as exogenous from an economists perspective it may still be endogenous from the perspective of neuroscientists (e.g. Drevets et al., 2008 or biologists e.g. Levinson, 2006). Here we follow standard economics and treat the

brainchemistry determining our preferences as exogenous. For the theoretical model, the drop in utility captures any depressive disorder. For the numerical calibration, we conceptualize it as major depressive disorder (ICD-code 296). 2. The economic theory of rational suicide based on Hamermesh and Soss (1974) largely neglects depression as a cause of suicide. Instead it focusses on explained low utility (explained, for example, by low income, old age, or certain lifetime events). Cutler et al. (2001) briefly discuss depression as an acute state of high pain in youth. But altogether the theoretical literature neglects the disease of depression, conceptualized as a drastic and sustained decline of happiness without a cause. Naturally, the suicide literature does not consider repercussions of low utility on health behavior or on health outcomes (other than suicide), which are the objects of investigation in the present study. 3. Throughout this paper, aging is considered as a physiological phenomenon, defined as the intrinsic, cumulative, progressive, and deleterious loss of function that eventually culminates in death (Arking, 2006). It should not be confused with chronological aging from one birthday to the next, which is, of course, neither affected by depression nor by health behavior. 4. For an empirical study on the impact of depression on impatience, see Lerner et al. (2013). 5. The model of depression focusses on the impact of reduced happiness and neglects any independent influence of positive affect on behavior. 6. We follow the standard assumption in the literature that lifetime utility is additive in (discounted) instantaneous utility. In a stochastic version of this model, one could also discuss multiplicative utility and risk aversion with respect to the length of life as in Bommier (2006). We would expect that then individuals would consume more in earlier periods of their life. In a deterministic framework, however, the utility function suggested by Bommier would lead to additive utility (see Bommier, 2006, p. 1224, p. 1226) and would thus leave the qualitative results unchanged. 7. Mitnitski et al. estimate health deficit accumulation for Canadian men. Deficit accumulation within the USA and Canada appears to be similar enough to justify it as a good approximation for the U.S. (Rockwood and Mitnitski, 2007). 8. These labor income effects are chosen deliberately to be higher than suggested in the cited empirical studies in order to ensure that the effect is not underestimated. The real effect is likely to be lower than predicted by the model. According to the setup of the model, the permanent income hypothesis holds. In this framework, it does not affect the results whether the income loss originates from reduced labor supply at the intensive margin (e.g. through unpaid sick leave during the day or week) or at the extensive margin (through early retirement). 9. The shocked life cycle trajectories are obtained from matching the trajectories obtained for until the age at which the shock occurs with the respective trajectories for δ > 0 from the onset of the shock until death. At the age of the shock, the final values of the state variables of the first trajectories become the initial values of the state variables of the second trajectories (transversality condition).