The Cognitive Effects of Depression: Evidence From an Instrumental Variable Approach

Vahé Nafilyan , King's College London

In this paper, we analyse the effect of poor mental health on cognitive abilities. Whilst there is evidence that poor mental health reduces labour market participation, less attention has been paid to wider impacts on cognitive performance and productivity. Using longitudinal data about older adults from 18 countries, we show that worsening depressive symptoms move along a decline in cognitive abilities. We find that the association is driven by both reduced concentration and motivation. To test whether the relationship is not driven by time-varying heterogeneity, we use recent maternal loss as an instrument for depressive symptoms. We find that depressive symptoms reduce cognitive performance. These cognitive effects could be a significant element of the economic social cost of poor mental health, as impaired cognition may not only lead to reduced productivity in the workplace but also affect financial decisions and many other aspects of everyday life.

See paper

 Presented in Session 14. Cognitive Aging