Understanding the impacts of income and welfare policy responses to COVID-19 on inequalities in mental health: a microsimulation model University of Glasgow

Unemployment and poverty have a significant impact on mental health, and understanding this link has implications for income and welfare policy design. During the COVID-19 pandemic, the UK government and devolved administrations implemented policies to try to maintain employment and income levels. 

This project examined the effects of the pandemic and associated recession on mental health and inequalities, examining how income and benefit policies influenced these outcomes. The three main pathways examined were: changes in employment status, changes in income levels and changes in poverty status.

The project team developed a mathematical model that provides projections for health and economic outcomes. They used it to analyse three scenarios: the policy response to the COVID-19 recession, the Universal Credit uplift, and the introduction of the Health and Social Care Levy.

The analysis found that employment is much more important in determining mental health outcomes than changes in income levels or poverty status. 

The COVID-19 crisis substantially increased the level of potentially clinically significant psychological distress within the UK population in 2020. Through economic pathways, mainly by protecting employment, the UK policy response to the economic crisis is estimated to have prevented a further 1.2 million cases of common mental disorders in 2020. Beyond 2021, as employment levels rapidly recovered, psychological distress returned to the pre-pandemic trend. These policies also had a lasting impact in restricting poverty levels.

Removal of the £20 uplift in Universal Credit is projected to increase poverty levels by 0.5% by 2025. The introduction of the Health and Social Care Levy is projected to have minimal effects on mental health, employment, income and poverty.

This project has demonstrated the feasibility of using microsimulation to analyse the interaction of health and economic outcomes. The proof-of-principle tool is now available to researchers for them to track the effects of policy decisions over many years. The analysis indicated that policies protecting employment during an economic crisis are effective in preventing short-term mental health losses and have substantial public health benefits.

Contact

For more information about this project, please contact Vittal Katikireddi, Senior Clinical Research Fellow, University of Glasgow, and Honorary Consultant in Public Health, Public Health Scotland.