Why the Stock Market Makes You Crazy - OZY | A Modern Media Company

Why the Stock Market Makes You Crazy

Why the Stock Market Makes You Crazy

By Nathan Siegel

SourceMichael Melford/Getty


Invest at your own risk — hospital bills ain’t cheap.

By Nathan Siegel

At some point in their lives, many Americans face a tough choice: mattress or mutual funds? There’s no sure investment bet, but it turns out that money isn’t the only thing you can lose in the stock market. You could also lose your mind.

According to new research:

A drop in the stock market of

1,000 points

was accompanied by a


increase in mental-health-related hospitalizations.

Researchers also found that for every consecutive day that the stock market dropped, mental health hospitalizations increased 0.36 percent. Losing money causes stress and anxiety? No surprise there. But Dr. Chin-Shyan Chen, a professor of economics at National Taipei University and one of the study’s authors, says it’s among the first research to find such a concrete connection between the stock market and mental health. And this isn’t agita they’re talking about — it’s an uptick in filled-up hospital beds. 

The study, published in the journal Health Policy and Planning, analyzed data from 1998 to 2009, from Taiwan’s National Health Insurance Research Database, which cataloged hospitalizations across the island nation. The researchers compared that data to performance by TAIEX, an index for stocks traded on the Taiwan Stock Exchange. People aren’t getting overly stressed just about losing money in the stock market, says Chen, but also what that means for their job security and, in general, the well-being of their family. Drops were particularly hard on middle-aged men.

A similar study of Californian investors’ mental health corroborates the Taiwanese research. The University of California, San Diego (UCSD) put a figure on the cost to treat mental-health-related hospitalizations following stock declines in California from 1983 to 2011: some $100 million. And that doesn’t include the cost of mental illnesses that aren’t treated by the person going to the hospital, which the authors estimate is “a huge percentage.”

Of course, stock market fluctuations don’t take place in a vacuum — events like terrorism attacks or wars may influence not just the market, but also the mental health of the population. The UCSD study took this into account; the Taiwanese one did not. It’s also likely that the stock market alone doesn’t cause mental illness, but rather “nudges people already near the edge of the cliff off,” says Meir Statman, a professor of finance at Santa Clara University. Since the data used by the Taiwanese researchers didn’t take into account patients’ prior history of mental illness, socio-economic status or alcohol use, among other factors, it wouldn’t be fair to point the finger only at the stock market. Take job loss, for example, which correlates with both stock market loss and mental health, says Lauren Nicholas, an assistant professor of health economics at Johns Hopkins University. Of course, given the stock market’s history of collapsing, that pointing finger may not be a bad thing.

An earlier version of this article misidentified the affiliation of a source.


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