Economic Consequences of Depression


Sangath conducted two randomized controlled trials—the PREMIUM and SHARE trials conducted between 2013 and 2017 in India with a total of 773 participants. The study is a follow up on the previous trials where we will revisit these participants and utilize cutting edge methods from experimental and development economics to measure the impacts of (treating) depression on economic preferences and beliefs, belief formation and information processing, and real-world economic behaviors.


A. PIs (Full Names of PIs and their University):

1. Dr. Vikram Patel, Harvard Medical School
2. Prof. Gautam Rao, Harvard University
3. Prof. Frank Schilbach, Massachusetts Institute of Technology
4. Prof. Johannes Haushofer, Princeton University
5. Prof. Jonathan de Quidt, Institute for International Economic Studies
6. Bhargav Bhat, Sangath
7. Pierre-Luc Vautrey, Massachusetts Institute of Technology


The WHO declared Major Depressive Disorder, the world’s leading cause of disability, with a lifetime prevalence of 13% (Friedrich 2017). Depression is especially common – and usually untreated – among the poor (Lund et al. 2010). While the severe health burden of depression is increasingly recognized, little is known about how depression affects economic behaviors, decision-making and outcomes. In addition, we have limited causal evidence on the mechanisms through which depression might affect economic outcomes. Research in medicine and psychology has proposed cognitive models of depression (e.g. Beck 1967), and provided a large body of correlational evidence that depression is associated with pessimistic beliefs and a reduced locus of control (Abramson et al. 1989; Klein et al. 1976). Such systematically biased beliefs might have consequences for important economic behaviors, such as investments in education, health, skill-building, or saving for the future.


Sangath, a mental health research organisation in India conducted two randomised controlled trials in 2013 and 2017 – PREMIUM and SHARE.These clinical trials aimed to treat depression using low-cost, peer-delivered psychotherapy among low-income individuals and comprised of 493 participants in PREMIUM and 280 pregnant women in SHARE respectively. Primary health center (PHC) attendees and who had a score above 9 on the Patient Health Questionnaire -9 (PHQ-9) were identified as subjects for these trials. In the main study, we aim to conduct a follow up study on these previously identified 773 participants.

We attempt to answer the following research questions— (i) How does depression affect economic concepts such as time and risk preferences, savings and loan-take-up, or beliefs and information-processing? (ii) Do low-cost psychotherapy interventions to treat depression among the indigent impact these economic outcomes, and lastly (iii) Does depression play a role in generating a poverty trap?


We complement the survey measures and real-world observations with measures from experimental economics to understand the mechanisms through which psychotherapy affects economic outcomes.We aim to measure three types of outcome variables: household surveys; real-world economic choices such as savings and participation in job training;and experimental measures to elucidate the mechanisms behind any effects.

  1.  Beliefs and Information Processing: We utilize both survey measures from psychology and closely related experimental games to measure participants’ beliefs about their own abilities and the world
  2.  Economic Preferences: Preferences are a major driver of individual behavior in economics, and it is possible that psychotherapy affects economic outcomes by changing people’s time, risk, or social preferences.

Measures of economic well-being and real-world economic choices A central question of this study is whether psychotherapy for depression alleviates poverty and improves related dimensions of well-being. We try to answer this question using the following survey measures:

  • Consumption
  • Labor supply and earnings
  • Education and human capital investments
  • Savings
  • Intimate partner violence
  • Psychological well-being: