Healthy minds live in healthy bodies – effect of physical health on mental health: Evidence from Australian longitudinal data

It is well known that physical and mental health are closely related, with growing evidence for biological and behavioural pathways. Mostly the research has focussed on mental health as the key driver of this inter-connection; the extent physical health shapes mental health has received less attention. We aim to derive robust estimates of the unique role physical health may play in shaping mental health outcomes. To do so we use a novel approach, incorporating longitudinal and instrumental variable methods which can address the reciprocal relationship between physical and mental health, and the endogeneity of physical health, before estimating the physical to mental health pathway. A sample of 209,442 observations (or 24,966 unique individuals) aged 15 and over spanning 18 years (2002-2019) was extracted from the Household Income and Labour Dynamics in Australian Survey (HILDA). We find that physical activity and health shocks erode mental health via their impact on physical health with a one point improvement (or worsening) in physical health scores (0-100) resulting in a rise (or decline) of 0.43 points (or 43%) in mental health score.