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Manuela Angelucci

Depression, Economic Behavior, and Treatment Heterogeneity

Project summary

Overview: Depression is a leading cause of morbidity in India and other developing countries. This project intends to study the effect of treating depression on economic behavior and on whether people respond to aid programs differently depending on whether they are depressed or not. We will implement a 4-arm Randomized Control Trial in which people with mild to moderate depression randomly receive (1) nothing, (2) mental health treatment, (3) livelihoods support (employment and self-employment training and assistance), (4) mental health treatment and livelihood support.

Intellectual Merit: Depression may be one determinant of poverty traps, as poverty causes poor mental health, which may exacerbate poverty both intra- and inter-generationally, as depression may reduce productivity and maternal depression may hurt early childhood growth. Poor mental health may also be a cause for the low take-up rates common observed in aid programs: by causing fatigue, poor concentration, and lack of interest, depression may distort people’s response to economic incentives. The intellectual merit of this research project, therefore, is threefold: (1) to study one of the determinants of poverty traps, (2) to understand how mental health affects the response to economic incentives, and (3) to identify effective economic policies in the presence of mental illness.

Broader Impact: This research project will shed light on the role of depression as a determinant of poverty traps, of the response to economic incentives, and of the design of effective economic policies. More broadly, depression, though being a leading cause of morbidity and disability, is underdiagnosed, undertreated, and stigmatized in the developing countries. Given its ubiquity, a better understanding of its impact on the lives of the poor is important. Nevertheless, the evidence of its impact is limited and, as far as we know, this is the first project that studies the effect of depression on poverty and economic incentives.

Background and Study Description

Depression is a common mental disorder that presents with depressed mood, loss of interest or pleasure, decreased energy, feelings of guilt or low self-worth, disturbed sleep or appetite, and poor concentration. This mental illness is a leading cause of morbidity in India and other developing countries. Poverty may foster depression by creating stressful life circumstances. In turn, depression may beget poverty by reducing work time, work effort, savings, and maternal investments in children.

Breaking this vicious circle might be difficult, as the effects of depression, from fatigue to impaired concentration, to diminished interest in daily activities may render depressed subject unresponsive to standard economic interventions. Indeed, we conjecture that one of the reasons for the puzzling low takeup rates of aid programs found time and again by development economists – from vaccination campaigns to purchases of weather index insurance, or from the adoption of high-yielding agricultural techniques to the use of bednets – might be the poor mental health of the intended recipients: to identify and take advantage of positive opportunities, a person has to be in the “right place” mentally.

Therefore, we conjecture that alleviating depression will have two types of beneficial effects: first, it will improve economic outcomes such as labor supply, productivity, and parenting. Second, it will improve the takeup and effectiveness of aid programs.

We will test these hypotheses through a field experiment, in an intervention thatcombines depression treatment with economic assistance. The NGO Grameena Abhyudaya Seva Samasthe (GASS) will implement the intervention in Doddaballapur, Karnataka over six months across four experimental treatment arms. Arm 1 will receive depression treatment and livelihoods support. Arm 2 will receive only depression treatment. Arm 3 will receive only livelihoods support. Arm 4 will not receive either benefit. We will randomize participants by village across these arms. Village randomization reduces the chance that participants will learn about the benefits that people in other arms are receiving. As we show in the table below, comparisons across these arms answer several questions.

We will enroll participants by screening for depression in the community and measure impacts by surveying participants before and after the intervention. Participants who do not receive either depression treatment or livelihoods support through the study will receive help immediately after the follow-up survey. We will also enroll a non-experimental comparison group from outside of the service area that will not receive treatment.