The Effects of Relative Income Deprivation, Social and Economic Capital, and Poverty on Adult Mental Health

Background: While the negative impacts of living in poverty on mental health are well established, it remains unclear how poverty in absolute terms intersects with poverty as experienced subjectively in comparison to others with more resources. Is deprivation itself harmful, or daily confrontations with inequity? Or does mental health improve because of the economic/social gains from living with higher income neighbors? Our study explores the effects of low absolute income and relative income deprivation—the subjective experience of earning less than others within neighborhoods, in both childhood and adulthood, on adult mental health. We also examine whether adult mental health outcomes are affected by the interaction between low absolute income and low relative income. Although prior research has found an association between low income and mental illness, as well as an association between relative income deprivation and mental illness, this is the first study to look at the effects of relative income deprivation within neighborhoods in combination with low absolute income on adult mental health in the United States.

Methods: We use restricted, nationally representative, longitudinal data from the Panel Study of Income Dynamics (PSID) from 1968 to 2019, to examine the effects of income and relative income deprivation on different levels of mental health distress. We use a number of analytical techniques, including OLS regression, family fixed effects, and other sensitivity analyses, to examine the proportion of years that people indicate feelings of sadness, hopelessness, or worthlessness. We use interactions between income and relative income within the person’s neighborhood to determine if the effects of relative deprivation differ for those with the lowest income relative to those with higher incomes.

Results: Our analyses show that those at the lowest income levels in adulthood are most affected by relative income deprivation for all levels of mental health distress. Overall, adults who have income at the poverty line and are at the lowest income rank in their respective neighborhood experience a 14 percent point increase in the percentage of time with any feelings of sadness, hopelessness or worthlessness compared to those at the poverty line but at the 25^th percentile in their neighborhood income rank (48% vs. 34% of the time). For those with moderate income we find smaller effects and while those with the highest incomes show no effects by income rank.

Implications: These results point to the need for policies that reduce income inequality, but also for mental health services and community organizing to counter negative self-worth associated with economic exclusion. Our findings raise questions about the ethics and strategies of poverty-aware clinical practice. Therapies that conceptualize a person’s mental health exclusively in terms of individual psychology risk missing or exacerbating the compound effects of poverty and relative income deprivation. Thus, social workers and allied practitioners in community mental health care must do more than treat mood symptoms. We must also find ways to organize with clients and communities in opposition to systems of socioeconomic oppression and disrupt isolation, self-blame, and stigma associated with poverty.