This paper offers new evidence on the effect of relative position on mental health using regional unemployment rates as an instrumental variable. The intuition behind relative position is that individual’s construct an income ranking of themselves compared to their peers and that this comparison affects mental health. Changes in this ranking might affect mental health, but changes in mental health might also affect the ranking. Using regional unemployment rate as an exogenous shock on the ranking, but not on mental health the causal effect of relative position on mental health is determined. The results show that relative position has a substantial impact on mental health.