Too Unwell to Trust? The Effect of Mental Health on Social Trust in Europe

Social trust is often thought to be adversely affected by mental health problems. However, rigorous causal evidence required to substantiate this thought is scarce. Here I examine the causal effect of individuals' mental health on social trust using data from the European Social Survey. Estimating the causal effect, however, is a formidable task since the relationship between mental health and social trust is endogenous due to reverse causality and unmeasured confounding. I circumvent these difficulties by using a recently developed econometric technique that does not rely on valid exclusion restriction for identification. I find strong evidence that mental ill health has a significant negative effect on social trust. Further, I provide suggestive evidence which shows that the adverse effect of mental ill health on social trust arises due to reductions in individuals' level of optimism and hope, and participation in social networks caused by mental ill health. Overall, the results suggest that for achieving a durable increase in social trust - which often is one of the fundamental objectives of policy makers - interventions to promote mental health of individuals could be extremely useful.