Relative economic status and mental health among Chinese adults: Evidence from the China health and retirement longitudinal study

Recent research documents increasing unhappiness (even depression) among Chinese adults despite the rapid economic growth in China. This paper explains this discrepancy by exploring the relationship between relative economic status and mental health (measured by Center for Epidemiologic Studies Depression Scale score) among the middle-aged and elderly in China. In measuring relative economic status, we use five reference groups for comparison (i.e., relatives, colleagues, schoolmates, neighbors or villagers, and people in the same city or county). Using data from 2013 China Health and Retirement Longitudinal Study, we find that individuals with relatively lower economic status are more likely to be mentally depressed. The relationship differs across reference groups for comparisons, with the larger impacts seen from the comparison against acquaintances, while the impact of comparison to regional average is the smallest despite its frequent use in the literature. The relative economic status-mental health gradient is asymmetric; that is, the negative impact of worse relative economic status is comparatively larger and more significant than the positive impact of better relative economic status. Our results imply that reducing wealth gaps within groups of similar backgrounds can be more effective in improving people's mental health than a general reduction of wealth inequality within the population.