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Financial capability and psychological health

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Author Info

  • Taylor, Mark P.
  • Jenkins, Stephen P.
  • Sacker, Amanda

Abstract

Financial capability is receiving increasing interest among policy makers, who wish to reduce problem debt and welfare dependency and increase savings and general skills. We examine whether financial capability has impacts on psychological health independent of income and financial resources more generally using a nationally representative survey. Data from the British Household Panel Survey 1991–2006 are used to construct a measure of financial capability, which we relate to respondents’ psychological health using the 12-item General Health Questionnaire. Estimates from within-group panel data models indicate that financial capability has significant and substantial effects on psychological health over and above those associated with income and material wellbeing more generally. For men, having low financial capability has an effect larger than that associated with being unemployed, while for women it is similar to that of being divorced. Furthermore having low financial capability exacerbates the psychological costs associated with unemployment and divorce, while high financial capability reduces these costs.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 32 (2011)
Issue (Month): 5 ()
Pages: 710-723

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Handle: RePEc:eee:joepsy:v:32:y:2011:i:5:p:710-723

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Web page: http://www.elsevier.com/locate/joep

Related research

Keywords: Financial capability; Psychological health; Wellbeing; Panel data; BHPS;

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References

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Citations

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Cited by:
  1. Cahit Guven, 2008. "Reversing the Question. Does Happiness Affect Consumption and Savings Behavior?," Economics Series 2008_20, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. Dr Alex Bryson, 2013. "Not So Dissatisfied After All? The Impact of Union Coverage on Job Satisfaction," NIESR Discussion Papers 11606, National Institute of Economic and Social Research.
  3. Maria Mercedes Teijeiro Álvarez (ed.), 2013. "Investigaciones de Economía de la Educación," E-books Investigaciones de Economía de la Educación, Asociación de Economía de la Educación, edition 1, volume 8, number 08, 7.

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