Mental health and abortions among young women: Time-varying unobserved heterogeneity, health behaviors, and risky decisions

In this paper, we provide causal evidence on abortions and risky health behaviors as determinants of mental health development among young women. Using administrative in- and outpatient records from Sweden, we apply a novel grouped fixed-effects estimator proposed by Bonhomme and Manresa (2015) to allow for time-varying unobserved heterogeneity. We show that the positive association obtained from standard estimators shrinks to zero once we control for grouped unobserved heterogeneity that varies across ages. We estimate the group profiles of unobserved heterogeneity, which reflect differences in unobserved risk to be diagnosed with a mental health condition. In addition, we analyze mental health development and risky health behaviors other than unintended pregnancies across groups. Our results suggest that these are determined by the same type of unobserved heterogeneity, which we attribute to the same unobserved process of decision-making. We develop and estimate a theoretical model of risky choices and mental health that is consistent with our empirical results. In the model, mental health disparity across groups is generated by different degrees of self-control problems. Our findings imply that mental health concerns cannot be used to justify restrictive abortion policies.