Abstract
ABSTRACT
How do individuals transition from distress to suicidal ideation? Existing economic and epidemiological approaches typically model suicide risk as a function of expected outcomes or accumulated stressors, but they offer limited insight into how individuals evaluate worsening life circumstances under uncertainty. In this paper, we develop a dynamic, reference‐dependent model of suicidal ideation grounded in cumulative prospect theory. The model captures two behavioral mechanisms: (i) outcomes are evaluated relative to a shifting personal reference point, and (ii) perceived probabilities are transformed into nonlinear decision weights when individuals evaluate uncertain future states. Using longitudinal household‐level data from South Korea and a hierarchical Bayesian estimation strategy, we estimate individual‐level parameters governing loss aversion, probability weighting, and reference‐point adaptation. We find that transitions into suicidal ideation are significantly associated with entry into the loss domain relative to one's own prior well‐being, rather than with absolute income or health alone. Loss‐side sensitivity, rather than gain‐side valuation, shows the strongest association with ideation, especially following recent negative well‐being changes. These findings suggest that suicidal ideation is closely linked to how individuals perceive and process deteriorating conditions, rather than to those conditions alone. By integrating behavioral decision theory with longitudinal data, this study provides evidence consistent with a reference‐dependent loss‐processing pathway under uncertainty and helps explain vulnerability to extreme psychological outcomes.