Studies in both developed and developing countries suggest psychological health problems tend to be more prevalent among those with lower socio-economic status although it has been a challenge to pin down the causal mechanisms that underlie these associations. It is likely that economic insecurity and poverty contributes to poor psychological health and, conversely, the evidence suggests that people suffering from psychological health problems tend to perform less well in the labor market and in school (Ettner et al. 1997; Dooley et al. 2000, Kessler et al. 1995). Health care service providers across the globe report that depression and anxiety are more prevalent among lower educated groups (Goldberg and LeCrubier, 1995; Patel and Kleinman, 2003). Poorer and more disadvantaged groups typically have little or no access to psychological health care services, especially in the developing world, thus potentially exacerbating the circular relationship of poverty and mental illness (Saraceno and Barbui, 1997).

Emerging research indicates that it is not necessarily poverty itself but adverse changes in socioeconomic status that are predictive of psychological stress (Das et al., 2007). If that is correct, the transitions, dislocations and uncertainties that are part of daily life for many people living in the developing world today are likely to carry with them an elevated burden of psycho-social health problems. Indeed, even as the physical health of a population improves, the same development process may lead to elevated social and psychological pathologies as societies undergo pronounced changes such as rapid urbanization, which tend to weaken traditional rural social bonds (Sugar et al., 1991). It has been suggested that the highest levels of psychological pathologies are found in countries emerging from conflict, where levels of post-traumatic stress disorder (PTSD) are high among the general population (Joop et al., 2001). Populations in regions that have suffered from natural disaster also suffer significantly more psychological distress in terms of depression, somatization, and anxiety (Wang et al., 2000; Frankenberg et al., 2007). Given this evidence, it is plausible to suppose that severe economic dislocation may have adverse effects on health in general and psychological health in particular. Tangcharoensathien et al. (2000) provide some evidence on the immediate aftermath of the 1997 financial crisis in Thailand. Although the overall impacts on physical and psychological health in this specialized study sample are mixed, the reported prevalence of severe stress, suicidal ideation, and hopeless feelings increased substantially among the sub-group of unemployed. The Thai crisis was not as deep, far-reaching, or longlasting as the Indonesian crisis and so the impact of the Indonesian crisis on the psychological well-being of the population may have been more widespread. We turn now to assess that evidence.

# _The data_

The Indonesia Family Life Survey (IFLS) is an on-going multi-purpose individual-, householdand community-level longitudinal survey. The first wave of IFLS was fielded in 1993 and collected information on over 30,000 individuals living in 7,200 households. The original sample covered 321 communities in 13 provinces and is representative of the population residing in those provinces, about 83% of the national population. The same respondents were re-interviewed in 1997 (IFLS2), a few 3