Liberalizing reforms do not cause suicide: Causal estimation using matching, 1980–2019

The impact of market liberalization on the subjective well-being (SWB) of societies has been thoroughly investigated over the past two decades using indexes of economic freedom. However, one crucial related aspect of well-being at the societal level remains unexplored with aggregate measures of liberalization: rates of suicide. The critical literature on liberalization suggests market reforms are expected to boost suicide. To our knowledge, we are the first to explore the issue using the Economic Freedom of the World (EFW) measure in a quasi-experimental framework. We do so by identifying 43 countries experiencing large, sustained jumps in economic freedom. We then use matching methods to obtain the average treatment effect in the 10 years following the jump. Our main finding, which is robust to a variety of alternative specifications, including a different estimator (synthetic difference-in-differences), is that we detect virtually no statistically significant positive effect of aggregate liberalization on suicide at the conventional level. Thus, we are unable to corroborate the critics’ prediction about reforms worsening this aspect of psychological well-being. We find evidence that individual reform packages, such as sound money, instead even work protectively.