Mental Health and Optimal Avoidance Behavior

Transcription

1 Mental Health and Optimal Avoidance Behavior Dennis Krieger and Klaus Wälde Johannes Gutenberg University Mainz May 3rd 2016

2 1. Introduction

3 1. Introduction ˆ [Motivation] Psychological distress concerns everyone of us uncontrollable idiosyncratic risks (e.g. accidents, physical illness, job loss) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

4 1. Introduction ˆ [Motivation] Psychological distress concerns everyone of us uncontrollable idiosyncratic risks (e.g. accidents, physical illness, job loss) controllable risky activities (working overtime,substance abuse etc.) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

5 1. Introduction ˆ [Motivation] Psychological distress concerns everyone of us uncontrollable idiosyncratic risks (e.g. accidents, physical illness, job loss) controllable risky activities (working overtime,substance abuse etc.) mental states aect behavior (psychology explains that very well) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

6 1. Introduction ˆ [Motivation] Psychological distress concerns everyone of us uncontrollable idiosyncratic risks (e.g. accidents, physical illness, job loss) controllable risky activities (working overtime,substance abuse etc.) mental states aect behavior (psychology explains that very well) ˆ [Problem] From an economic perspective these explanations lack of analytical stringency Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

7 1. Introduction ˆ [Motivation] Psychological distress concerns everyone of us uncontrollable idiosyncratic risks (e.g. accidents, physical illness, job loss) controllable risky activities (working overtime,substance abuse etc.) mental states aect behavior (psychology explains that very well) ˆ [Problem] From an economic perspective these explanations lack of analytical stringency ˆ [Goal] We want to contribute to a deeper understanding of behaviors inuenced by subjective mental states... Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

8 1. Introduction ˆ [Motivation] Psychological distress concerns everyone of us uncontrollable idiosyncratic risks (e.g. accidents, physical illness, job loss) controllable risky activities (working overtime,substance abuse etc.) mental states aect behavior (psychology explains that very well) ˆ [Problem] From an economic perspective these explanations lack of analytical stringency ˆ [Goal] We want to contribute to a deeper understanding of behaviors inuenced by subjective mental states... ˆ [Approach]... by providing a formal framework to analyze individuals' risk taking behavior under the inuence of psychological distress Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

9 1. Introduction ˆ [Motivation] Psychological distress concerns everyone of us uncontrollable idiosyncratic risks (e.g. accidents, physical illness, job loss) controllable risky activities (working overtime,substance abuse etc.) mental states aect behavior (psychology explains that very well) ˆ [Problem] From an economic perspective these explanations lack of analytical stringency ˆ [Goal] We want to contribute to a deeper understanding of behaviors inuenced by subjective mental states... ˆ [Approach]... by providing a formal framework to analyze individuals' risk taking behavior under the inuence of psychological distress ˆ [Related Lit] Other existing approaches that took up psychological phenomena and brought them into a well-founded analytical framework: addiction (Becker and Murphy, 1988), cue-controlled behavior (Laibson, 2001), stress (Wälde, 2015) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

10 2. The Model

11 2. The Model 2. The Model Individuals rational decision makers Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

12 2. The Model 2. The Model Individuals rational decision makers trade-o: risky activity k(t) vs. mental ill-health q(t) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

13 2. The Model 2. The Model Individuals rational decision makers trade-o: risky activity k(t) vs. mental ill-health q(t) enjoy the pleasure generated by the risky activity υ(k(t)) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

14 2. The Model 2. The Model Individuals rational decision makers trade-o: risky activity k(t) vs. mental ill-health q(t) enjoy the pleasure generated by the risky activity υ(k(t)) suer the pain of mental ill-health ψ(q(t)) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

15 2. The Model 2. The Model Individuals rational decision makers trade-o: risky activity k(t) vs. mental ill-health q(t) enjoy the pleasure generated by the risky activity υ(k(t)) suer the pain of mental ill-health ψ(q(t)) utility function u(k(t), q(t)) = υ(k(t)) γψ(q(t)) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

16 2. The Model 2. The Model Dynamics of mental ill-health are such that probability that mental ill-health increases depends on how much individual engages in the risky activity (endogenous) Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

17 2. The Model 2. The Model Dynamics of mental ill-health are such that probability that mental ill-health increases depends on how much individual engages in the risky activity (endogenous) mental ill-health decreases due to natural recovery (exogenous) mental ill health time Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

18 2. The Model 2. The Model Dynamics of mental ill-health are such that probability that mental ill-health increases depends on how much individual engages in the risky activity (endogenous) mental ill-health decreases due to natural recovery (exogenous) mental ill health Transition law of mental ill-health dq(t) = dq A (t) dq B (t) time Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

19 3. Results

20 3. Results 3.1. Optimal Behavior - Individual Level 3.1. Optimal Behavior - Individual Level Eect of mental ill-health on behavior depends on the source of psychological distress and on individuals' risk attitude Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

21 3. Results 3.2. Distributional Dynamics - Aggregate Level 3.2. Distributional Dynamics - Aggregate Level Fokker-Planck equations Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

22 3. Results 3.2. Distributional Dynamics - Aggregate Level 3.2. Distributional Dynamics - Aggregate Level Fokker-Planck equations explain distributional dynamics Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

23 3. Results 3.2. Distributional Dynamics - Aggregate Level 3.2. Distributional Dynamics - Aggregate Level Fokker-Planck equations explain distributional dynamics simulate policy interventions (e.g. improve mental health care) p(q,t) initial stationary mean well being t 0 0 q t Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

24 4. Conclusion

25 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

26 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

27 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on the source of psychological distress Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

28 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on the source of psychological distress individuals' risk attitude Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

29 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on the source of psychological distress individuals' risk attitude On the aggregate level our framework allows us to understand the distributional dynamics and simulate policy interventions Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

30 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on the source of psychological distress individuals' risk attitude On the aggregate level our framework allows us to understand the distributional dynamics and simulate policy interventions How much mental health care should be provided? Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

31 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on the source of psychological distress individuals' risk attitude On the aggregate level our framework allows us to understand the distributional dynamics and simulate policy interventions How much mental health care should be provided? How long will it take to reach the new stationary equilibrium? Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

32 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on the source of psychological distress individuals' risk attitude On the aggregate level our framework allows us to understand the distributional dynamics and simulate policy interventions How much mental health care should be provided? How long will it take to reach the new stationary equilibrium? How will the new equilibrium distribution look like? Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

33 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on the source of psychological distress individuals' risk attitude On the aggregate level our framework allows us to understand the distributional dynamics and simulate policy interventions How much mental health care should be provided? How long will it take to reach the new stationary equilibrium? How will the new equilibrium distribution look like? For economists: Make insights from psychology usable Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

34 4. Conclusion We provide a formal framework to analyze the eect of mental health on individual behavior and subjective well-being We nd that this eect crucially depends on the source of psychological distress individuals' risk attitude On the aggregate level our framework allows us to understand the distributional dynamics and simulate policy interventions How much mental health care should be provided? How long will it take to reach the new stationary equilibrium? How will the new equilibrium distribution look like? For economists: Make insights from psychology usable For psychologists: Formal foundation that substantiates their insights Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6

35 Thank You!

36 5. Conclusion References I Becker, G. S., Murphy, K. M., A theory of rational addiction. The journal of Political economy, Laibson, D., A cue-theory of consumption. Quarterly Journal of Economics, Wälde, K., Stress and Coping: An Economic Approach. mimeo Gutenberg University Mainz, available at Dennis Krieger and Klaus Wälde Mental Health and Optimal Avoidance Behavior May 3rd / 6