Identifying the Elusive Causal Income Effect on Mental Well-being


Rauf, Tamkinat (2022). Identifying the Elusive Causal Income Effect on Mental Well-being. Integrating Genetics and the Social Sciences 2022. Boulder, CO.


While a negative association between income and psychological distress is widely documented, this estimate is subject to bias due to reverse causation, other sources of confounding, and measurement errors in income. Prior causal analyses exploiting natural experiments have found divergent effects, ranging from negative to positive. But this research also has important limitations, such as relying on comparisons between individuals sensitive to each other's relative income or capturing only a narrow set of pathways through which income affects mental well-being. This study estimates the causal effect of income using genetic controls and instrumental variables and it investigates the effects of both current and permanent income, the latter being less susceptible to measurement error. A series of models with varying assumptions is estimated in two datasets representative of middle-aged and older US adults. Compared to associational estimates for current income, permanent income had a stronger relationship with depressive symptoms, and the average causal income effect based on instrumental variable models was larger than the associational estimates. These results suggest that income has a stronger causal effect on mental well-being than previously believed.


Reference Type

Conference proceeding

Book Title

Integrating Genetics and the Social Sciences 2022


Rauf, Tamkinat

Year Published


City of Publication

Boulder, CO

Reference ID