How does relative income affect mental health within a developing country? The case of Indonesia

Abstract

This study is amongst the first to research the relationship between relative income (relative expenditure and relative wealth) and mental health in a developing country, Indonesia, utilising data from the Indonesian Family Life Survey (IFLS) across 2007 and 2014. The Correlated Random Effects (CRE) Mundlak Transformation model, which was built-up from several other regression models, was employed. Results showed that relative expenditure and relative wealth yielded a positive and negative relationship with the mental health score respectively, where the higher the score, the higher the levels of depression experienced by the respondent. This study also conducted four further angles of analysis (gender, geographical residence, ranking, Subjective Well-Being (SWB)). Through the analysis, policymakers can consider adopting more targeted awareness campaigns and tax regimes for wealth redistribution.