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J Ment Health Policy Econ. 2004 Dec;7(4):167-75.

Does relative deprivation predict the need for mental health services?

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RAND Corporation, 1200 South Hayes Street, Arlington, VA 22202-5050, USA.



Several studies postulate that psychological conditions may contribute to the link between low relative income and poor health, but no one has directly tested the relationship between relative deprivation and mental health disorders. In this paper, we investigate whether low income relative to a reference group is associated with a higher probability of depressive disorders or anxiety disorders. Reference groups are defined using groups of individuals with similar demographic and geographic characteristics. We hypothesize that perceptions of low social status relative to one's reference group might lead to worse health outcomes.


We attempt to determine whether an individual's income status relative to a reference group affects mental health outcomes. Our contributions to the literature include (i) defining reference groups using demographic characteristics in addition to geographic area, (ii) looking at an individual's relative income status rather than low income or aggregate-level income inequality, and (iii) focusing specifically on mental-health related outcomes.


Our primary data source is the national household survey component of HealthCare for Communities (HCC), funded by the Robert Wood Johnson Foundation to track the effects of the changing health care system on individuals at risk for alcohol, drug abuse, or mental health disorders. HCC is a complement to the Community Tracking Survey (CTS) and reinterviews participants of the main study. To construct relative deprivation measures, we used data from the 5% Public Use Micro Data Sample of the 2000 Census. Our measure of relative deprivation is defined using Yitzhaki's index, a term that measures the expected income difference between an individual and others in his or her reference group that are more affluent. We evaluate the relationship between relative deprivation and mental health using conditional logit models with reference group random effects.


Even after controlling for an individual's absolute income status, those with low relative income are at higher risk of experiencing a mental health disorder. Our findings hold for both depressive disorders and anxiety/panic disorders.


Our findings suggest that relative deprivation is associated with an increased likelihood of probable depression and anxiety or panic disorders. Simulations suggest that a 25 percent decrease in relative deprivation could decrease the probability of any likely mental health disorder by as much as 9.5 percent. Limitations of this study include the fact that we only have one measure of relative deprivation, and that reference groups are defined using relatively large geographic areas.


Low relative income may contribute to socioeconomic disparities in mental health. Efforts to eradicate socioeconomic differentials should take into account psychological perceptions and self-esteem in addition to absolute material resources.


Future work should explore whether mental health disorders explain the link between relative deprivation and poor physical health.

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