Having even one context in which a chosen name could be used was associated with a 29 percent decrease in suicidal thoughts.
When young people who are transgender are allowed to use their chosen name in places such as work, school and at home, their risk of depression and suicide drops.
The findings were published in the Journal of Adolescent Health to coincide with Saturday's annual Transgender Day of Visibility.
Researchers, led by a team at The University of Texas, say their work represents "one of the largest and most diverse studies" in the area of transgender mental health health to date.
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Researchers interviewed transgender individuals aged 15 to 21 and asked whether their chosen names could be used at school, home, work and with friends.
Compared with peers who could not use their chosen name in any context, young people who could use their name in all four areas experienced 71 percent fewer symptoms of severe depression, a 34 percent decrease in reported thoughts of suicide and a 65 percent decrease in suicidal attempts.
"Many kids who are transgender have chosen a name that is different than the one that they were given at birth," said author Stephen T. Russell, professor and chair of human development and family science.
"We showed that the more contexts or settings where they were able to use their preferred name, the stronger their mental health was."
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Earlier research by Russell found that transgender youths report having suicidal thoughts at nearly twice the rate of their peers, with about one out of three transgender young people reporting considering suicide.
In the new study, having even one context in which a chosen name could be used was associated with a 29 percent decrease in suicidal thoughts. The researchers controlled for personal characteristics and social support.