The Effect of Own Life Events on Own Mental Health

Abstract

In this paper, we use seven years of data (Waves 2 to 8 for the period 2002-2008) from the Household, Income and Labour Dynamics in Australia survey to estimate the effect of nine life-events on mental health for individuals aged 15 and over. Our analysis has three focal points: whether individuals adapt to life events, the one-off income required to compensate individuals for experiencing a life event, and the investigation of the effects of measures of social support, with a particular focus on marital status, kids, friends, and social network. To investigate these issues we use fixed effect models. There is no adaptation to having a serious illness and being a victim of violence. As a result, the monetary compensations required for constant utility are higher for these events compared to other events where adaptation is complete. Being married significantly buffers against the adverse effect of having a serious illness (e.g. reduces it by 12 per cent) and being a victim of violence (e.g. reduces it by 10.7 per cent).