Postgraduate Research Fellowship Report - Ruben Ruf
Project Title
The impact of foreign stock markets on mental health
Description of the Research Project
Each year, mental health issues cost the UK economy £118 billion, approximately 5% of the UK’s gross domestic product (McDaid et al., 2022). According to a survey conducted in 2017 by the National Centre for Social Research, 65% of the UK’s population have experienced a mental health issue and more than 40% of the population have suffered from depression (Mental Health Foundation, 2017). In many countries immigrants make up a considerable proportion of the population. In the UK, the number of foreign-born residents increased by 81% from 5.3 million in 2004 to over 9.5 million in 2021 (Rienzo and Vargas-Silva, 2022). Although stock market performance is one of the most salient influences on mental health within the economic spectrum (Ratcliffe and Taylor, 2015), there is no research to date investigating the relationship between immigrants’ mental health and stock markets in their home country. Existing research investigates the relationship between people’s mental health and domestic stock markets in their country of residence (Schwandt, 2018; Rohde et al., 2016; Frijters et al., 2015), but does not include their home country. To my knowledge, my study is the first to investigate if the mental health of immigrants is affected by stock market volatility in their home countries.
Output of the Research Project
Thanks to the TRiSS Postgraduate Research Fellowship, I was able to attend and present my research project at the 84th Annual Meeting of the Academy of Management (AOM) in Chicago, Illinois. The feedback provided by the conference participants was invaluable and extremely useful for the progression of my research project, particularly with regard to the data set, methodology, and theoretical contribution. I incorporated the feedback provided by the conference participants into my project and thereby significantly improved my work. Following the conference, an abstract of my work presented was published in the Academy of Management Proceedings (https://doi.org/10.5465/AMPROC.2024.14323abstract). The project is currently under review at a peer-reviewed academic journal.
Abstract
Despite the fact that immigrants make up a considerable proportion of the population in many countries, little is known about how their mental health is affected by stock markets in their home countries. We use panel data from the Understanding Society dataset to conduct a longitudinal study investigating this relationship for foreign-born residents in the UK, during the period 2010 to 2021. We provide novel evidence that immigrants’ subjective mental health is negatively impacted by stock market volatility in their home countries. This effect weakens as immigrants assimilate into the host country and increases with the immigrants’ age when they first arrive in the UK. We also find that diagnosed clinical depression as an objective measure of mental health is not affected. We recommend that immigrants be provided with both psychoeducation and financial education upon arrival in the host country to alleviate mental health issues.