Relative Poverty and Mental Illness in Adults, Children, and Adolescents in Industrialized Countries

Background: Economic resources are vital for the formation of individualized living conditions. By definition, persons suffering from absolute poverty live below the minimum standard at which basal life needs can be securely met; relative poverty is characterized by an income level that is no more than 50% or 60% of the median for the population in question. In 2024, 15.5% of persons living in Germany were relatively poor. In this narrative review, we discuss the link between relative poverty and mental illness among adults, children, and adolescents in industrialized countries.

Methods: We review pertinent studies (2004–2024) of relative poverty and mental illnesses as defined by the ICD or DSM criteria that were retrieved by a search in five scientific databases.

Results: Of the 3038 publications that were initially identified, 44 met the inclusion criteria. They revealed significant associations between relative poverty and mental illness, particularly depression, in adults as well as in children and adolescents. Five of the 44 studies did not demonstrate any association. Attempts were made to explain these associations in various ways; the dominant hypotheses were of a social decline because of mental illness, and of mental illness because of poor social conditions. Both the causation of poverty by mental illness and the causation of mental illness by poverty appear plausible. Combinations of the two explanations are conceivable as well.

Conclusion: The findings confirm the association of relative poverty with mental illness, yet the causal relationship remains largely unexplained despite the existence of comprehensive explanatory models. Sociopolitical measures might alleviate mental illnesses or lower their prevalence by reducing socioeconomic inequality.

Cite this as: Kalinowski O, Rössler W: Relative poverty and mental illness in adults, children, and adolescents in industrialized countries. Dtsch Arztebl Int 2025; 122: 579–85. DOI: 10.3238/arztebl.m2025.0144

People’s living conditions are materially determined by their incomes or assets. Persons affected by absolute poverty do not reach the minimum living standard to ensure basic living needs in a society. Concepts of absolute poverty define a minimum income to ensure such minimum living standards, whereas concepts of relative poverty define the thresholds of poverty at a level of 50% or 60% of the median income for the population (1, 2). In 2024, 15.5% of people in Germany were considered as affected by relative poverty. Women were affected to a greater degree—their at-risk-of-poverty rate was 16.2%; whereas in men it was 14.7% (3). Poverty concepts do not only engage with material privations but also with their causes and consequences.

Mental illness is identified in this article on the basis of defined clinical ICD and DSM diagnoses. Individual clinical parameters—for example, behavioral problems—are not considered. The inclusion of individual measurement parameters and subjective indicators provides an insight into how relative poverty is associated with mental illness.

Furthermore, this narrative review discusses different explanatory approaches of the association (4). It aims to explain the current research situation as regards the association between relative poverty and mental illness in adults, children, and adolescents in industrialized countries. In conclusion, we present some sociopolitical implications.

Methods

We carried out a literature search in electronic databases, including Medline (Web of Science), Cochrane, PubPsych, Embase Classi+Embase (Ovid), and APA PsycINFO (EBSCOhost), covering publications of the past 20 years up to December 2024. We adhered to the usual guidelines to ensure that the literature search was undertaken correctly (5, 6).

Our narrative review includes studies that investigated relative poverty and associated mental illness according to ICD and DSM diagnoses. Furthermore, we included studies dealing with suicide rates. We included research focusing on adults or on children and adolescents in industrialized countries. We excluded studies that concentrated on absolute poverty or educational attainment or which investigated only quality of life in connection with poverty. Furthermore, we excluded systematic reviews, meta-analyses, case reports, opinion articles, and qualitative studies.

All titles and abstracts identified in the database search were checked in two stages as regards their inclusion criteria. The full text of the studies potentially eligible was assessed by two experts independently of one another. Disagreements in decisions regarding inclusion were resolved by discussion or consultation with a third expert. We used the Newcastle Ottawa Quality Assessment Scale to assess the quality of the studies (7).

Results

Screening process and geographical distribution of the studies

The screening process for our review of mental illness and relative poverty started with 3038 studies that were determined by our database searches. After duplicates had been removed, 1770 studies remained for further analysis. Title screening reduced the number to 317; the subsequent abstract screening yielded 137 potentially relevant studies. Four were excluded because they were not accessible, which meant that 133 studies were available for full-text screening. After thorough perusal, 44 studies met our inclusion criteria.

Most of the studies were from the USA (n=24). Subsequently we included studies from Canada (n=5), the UK (n=4), Japan (n=3), and Denmark (n=2). Single individual studies came from Germany, the Netherlands, Iceland, and Finland. Furthermore, two studies included populations across country borders. Most were cross-sectional studies and some were longitudinal studies (N=16).

Independent and dependent variables and measurement parameters

We determined a wide spectrum of measurement parameters and endpoints for mental illness and relative poverty. Most studies investigated depression as their primary endpoint (n=38), but other psychiatric disorders were also identified as measurement parameters. These are described in eTable 1 (for adults) and eTable 2 (for children and adolescents). Relative poverty was assessed on the basis of several indices (see Table 3). While some studies concentrated on objective measures of poverty, others focused on affected persons’ subjective assessment.

Table 1

Relative poverty and mental health in adults*

Table 2

Relative poverty and mental health in children and adolescents

Table 3

Identified indicators for relative poverty and inequality, and explanations

eTable 2

Relative poverty and mental health among children and adolescents

Relative poverty and mental illness in adults

The studies’ results underline the close association between income and economic inequality on the one hand and mental illness on the other hand. Low income and great inequality are consistently associated with worse outcomes for mental health (8, 9, 10, 11, 12, 13, 14, 15). In particular, rates of depression (16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26) and anxiety disorders (27, 28, 29, 30) are higher. In a cross-sectional study from Denmark, persons on low incomes were 9.78 times more likely to develop depression than persons on higher incomes; 95% confidence interval: [6.49; 14.74] (9). In other studies the association between low incomes and depression was notably weaker. Pulkki-Råback et al. (28), for example, found that depression was 1.73 times more common in persons on low incomes [1.31; 2.29], and anxiety disorders were 1.56 times more common [1.14; 2.12]. Schizophrenia was also associated with a lower level of income and income inequality (31, 32, 33). Income inequality is also associated with post-traumatic stress disorder (PTSD) (34). Pabayo et al. (34) showed that in US states with greater income inequality, which usually leads to an increase in relative poverty, the incidence of PTSD was 1.3 times that in states with lower income inequality [1.04; 1.63].

Relative deprivation—that is, the subjective assessment of being financially disadvantaged compared with other groups—was also associated with a greater prevalence of depression (35, 36, 37) and anxiety disorders (38). Only two out of 34 studies did not find any association between relative poverty and mental illness in adults (39, 40, see eTable 1).

Relative poverty and mental illness in children and adolescents

In the group including children and adolescents, most studies were from Canada and the USA. The results showed that greater income inequality was significantly associated with depression (e2, e3, e4) and anxiety disorders (e4, e5, e6). Yang et al. (2023) showed that an increased prevalence of depression was significantly (p<0.05) associated with poverty (odds ratio [OR]=2.02; [1.31; 3.12]) (e6). A low income was also associated with a higher risk for psychotic disorders (e7). In three of the identified studies on children and adolescents, the suspected association between economic life situation and mental illness was not found (e6, e8, e9, see eTable 2).

Explanatory approaches

Several theoretical approaches have grappled with explaining the association between relative poverty and mental health. The debate is primarily dominated by two theories as regards potential causalities. The social drift (or social selection) hypothesis proposes that mental illness causes poverty, whereas the social causation thesis proposes that poverty leads to mental illness (e12, e13, e14).

The social capital hypothesis (e15, e16), the status anxiety hypothesis (e17, e18), the social rank theory (e19) and the theory of relative deprivation (e20, e21), and the social mobility hypothesis (e22, e23, e24) are explained in Table 4.

Table 4

Identified explanatory approaches and theories

Discussion

Summary and conclusions

The results underline the associations between relative poverty and mental illness. In a cohort study from Canada (e7), for example, low family income was associated with a notably increased risk for a diagnosis of non-affective psychotic disorder (adjusted hazard ratio [aHR] women=1.97; men=1.70). The retrospective analysis was based on administrative data from more than 190 000 adolescents (aged 13–19 years) from British Columbia. While most of the studies showed significant associations between relative poverty and negative effects on mental health—primarily depression—five of 44 studies did not find any significant associations (39, 40, e6, e8, e9). We were not able to identify obvious reasons for why no significant associations were found in these five studies. We can only assume that this can be explained with different circumstances, such as population differences, different data collection instruments, or unknown confounders.

Relative poverty is usually defined as an income level below 50% or 60% of the median. Different indicators exist to record socioeconomic inequalities at the individual and structural levels. At the regional level, the Gini coefficient is often used, which was originally a measure of income- or asset-related inequality. Income inequality and relative poverty are conceptually different, but a close association exists empirically. Rising income inequality usually leads to more persons falling under the threshold of relative poverty; relevant indices are therefore used as proxies for a higher prevalence of relative poverty.

Many studies use income as the main indicator of the association between economic status and mental health. Only three studies, however, make explicit distinctions between groups below the relative poverty threshold (22, 28, 31). Instead, lower income categories are mostly compared with higher ones without clarifying whether the former are considered relatively poor by definition. This lacking differentiation makes robust conclusions regarding the association between relative poverty and mental illness difficult, although we can assume that at least the lowest income categories fall below the threshold of relative poverty.

An alternative approach lies in measuring relative deprivation—that is, the subjective impression of being financially disadvantaged compared with others. This approach also has limitations as it is not based on reliable parameters. The limited conceptual distinction between relative poverty and adjacent socioeconomic indicators represents a central challenge to the empirical analysis of its effects on mental health.

The explanatory approaches provide a theoretical background for the identified associations, with the listed theories and hypotheses remaining speculative as their causal associations were studied and empirically confirmed only in single individual studies. Of all 44 identified studies, 26 are cross-sectional studies, which can show only correlation, but not causation.

An unequivocal empirical proof for the causal effect of relative poverty on mental illness is methodologically hard to establish, as it is not possible to conduct randomized controlled trials for this research question. Suitable approximations may be found in specific longitudinal models, such as cross-lagged panel models or quasi-experimental studies that investigate prevalence changes subsequent to, for example, the introduction of new socio-political measures.

It is of substantial importance that in industrialized countries, relative poverty quite obviously has a similar effect on the mental health of adults as well as of children and adolescents, even though the social drift/selection hypothesis can hardly be applied to children because they experience poverty exclusively through their pre-existing social environment and can’t influence this themselves. The parents’ mental illness that brought about social drift may be a risk factor for mental illness in certain cases. By comparison, the hypothesis according to which poverty contributes to mental illness seems equally plausible for children and adolescents (e25).

Of the 44 identified studies that met our criteria, 16 have a longitudinal design. These studies focused mostly on one of the two contradictory explanatory approaches (23, 24, 33). In the case of children and adolescents, we did not identify any studies that tested directional effects—that is, the unidirectional effect of poverty on mental illness or vice versa.

The literature, however, includes studies testing the social causation thesis with regard to behavioral problems that do not (yet) meet diagnostic criteria (e26, e27). Lee (e27), for example, studied the long-term effect of relative poverty on children’s socio-emotional development and showed that behavioral problems according to the behavioral problem index, which records, for example, antisocial behavior or hyperactivity, will surface to a more pronounced degree with continuing poverty and increasing age. Children’s scores were lower if their mothers had a higher educational attainment. The results of McLaughin et al (e9) too indicated that parental educational attainment plays a relevant part. They showed that where parental education was controlled for, neither relative deprivation nor the Gini coefficient were associated with mental illness in children. This implies that a part of the effect of poverty on children’s mental illness is moderated by their parents educational attainment. The other identified studies that related to children and adolescents showed—in spite of their longitudinal design—merely associations between poverty and mental illness, without further discussing the question of causality. This obviously constitutes a gap in research.

Within the group of adults, only one study investigated explicitly, as a function of its design, the direction of the association between financial situation and mental illness. The study by Prati et al. (11) analyzed bidirectional effects and showed that subjective financial status can (unidirectionally) lead to depression. Furthermore, bidirectional associations exist between subjective financial status and alcohol misuse (11).

The circumstance that evidence exists in support of the social causation thesis as well as the social drift hypothesis implies that the relation between poverty and mental illness may be context-dependent and potentially works both ways (29, 32). It is also possible that for an individual over their lifetime, both explanatory approaches of the reciprocal effect between poverty and mental illness may have a role.

More studies are therefore needed that investigate bidirectionality in a longitudinal design rather than focusing on only one explanatory approach. More research would be needed to test the extent to which causality depends on individual or structural factors—for example, resilience, educational attainment, social support, or barriers to accessing healthcare or the labor market. The fact that a clear association exists between financial inequality and mental illness, and that inequality has primarily societal causes, clarifies that mental illness is not only an individual problem but will have to be understood as a societal problem too.

Limitations

One of the most important limitations of this narrative review lies in the fact that the studies we included were methodologically very diverse. They differed in terms of their design, how they measured poverty, and what their results were in the area of mental health. This heterogeneity makes it difficult to compare results directly and to draw conclusions that are generalizable.

The cross-sectional design of most of the studies does not allow for studying causal associations. Longitudinal studies, which were underrepresented, are now needed to gain a better understanding of the temporal dynamic between socioeconomic inequality and mental illness. A further limitation lies in the fact that most studies came from the USA and Canada, which means limited generalizability of the results to other social support and healthcare systems.

The context of this narrative review did, furthermore, not allow for considering the situation of old people separately. The precarious living situation of many older people in our society makes it seem plausible that poverty contributes to mental illness in this group of the population.

Implications for political decision-makers

The results imply that fighting poverty also stands for preventive healthcare, at least as regards the mental health of the population. Similarly, making available affordable housing, a guaranteed minimum income, and a substantial retirement pension can also contribute to improving mental health in the population.

Conversely, medical-psychiatric rehabilitation also entails fighting poverty. As an example, we wish to mention “supported employment,” a measure that has been successful in attempting to keep mentally ill persons in the primary labor market or newly integrate them, rather than integrating them for the long-term in workshops for people with disabilities, which inevitably keeps those affected in the benefits system—and thus relative poverty—for their entire lives.

Conflict of interest statement
The authors declare that no conflict of interest exists.

Manuscript received on 19 February 2025, revised version accepted on 31 July 2025.

Corresponding author
Olivia Kalinowski

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