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Objectives:  This study was designed to explore the effect of the New Rural Pension Scheme on depressive symptoms or medical costs induced by depression.   Methods:  We used the Logit, OLS and 2SLS models to explore the impact of the pension on depression and medical costs. We also adopt the method of quantile regression and discontinuity regression to verify the causal relationship between the New Rural Pension Scheme and depression or medical costs induced by depression of the rural elderly.   Results:  We have found that the New Rural Pension Scheme decreases depressive symptoms of elderly in rural China (OR = 0.90), and the medical costs induced by depressive symptoms by 4.6%. Regression discontinuity results showed that pension significantly reduced the depressive symptoms (depression) and the medical expenditure caused by depressive symptoms (depression) by using parametric and non-parametric methods, and performing a placebo test. The mediating effect results showed that pension may improve mental health by increasing confidence about the future.   Conclusion:  We demonstrate that the pension significantly decreased both mental health problems and the medical expenses due to depressive symptoms and depression of elderly in rural China. Therefore, our results suggest that the Chinese government should perfect the New Rural Pension Scheme to eliminate barriers to mental health resources, especially for the rural elderly.

Does Social Pension Expansion Relieve Depression and Decrease Medical Costs? Evidence From the Rural Elderly in China