Financial capability and psychological health
AbstractFinancial 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Psychology.
Volume (Year): 32 (2011)
Issue (Month): 5 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/joep
Financial capability; Psychological health; Wellbeing; Panel data; BHPS;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
- Arber, Sara, 1991. "Class, paid employment and family roles: Making sense of structural disadvantage, gender and health status," Social Science & Medicine, Elsevier, vol. 32(4), pages 425-436, January.
- Paul Frijters & John P. Haisken-DeNew & Michael A. Shields, 2004. "Investigating the Patterns and Determinants of Life Satisfaction in Germany Following Reunification," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
- Blanchflower, David G. & Oswald, Andrew J., 2001.
"Well-Being Over Time in Britain and the USA,"
The Warwick Economics Research Paper Series (TWERPS)
616, University of Warwick, Department of Economics.
- Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001.
"Scarring: The Psychological Impact of Past Unemployment,"
London School of Economics and Political Science, vol. 68(270), pages 221-41, May.
- Andrew Clark & Yannis Georgellis & Peter Sanfey, 1999. "Scarring: The Psychological Impact of Past Unemployment," Studies in Economics 9903, Department of Economics, University of Kent.
- Bruno S. Frey & Alois Stutzer, 2000.
"Happiness, Economy and Institutions,"
CESifo Working Paper Series
246, CESifo Group Munich.
- Stefano DellaVigna, 2007.
"Psychology and Economics: Evidence from the Field,"
NBER Working Papers
13420, National Bureau of Economic Research, Inc.
- S. Dellavigna., 2011. "Psychology and Economics: Evidence from the Field," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
- Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-72, June.
- S. Dellavigna., 2011. "Psychology and Economics: Evidence from the Field," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
- Katharina Hauck & Nigel Rice, 2004. "A longitudinal analysis of mental health mobility in Britain," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 981-1001.
- repec:ese:iserwp:2006-40 is not listed on IDEAS
- Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July.
- Ingrid Robeyns, 2005. "The Capability Approach: a theoretical survey," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 6(1), pages 93-117.
- Marmot, Michael & Ryff, Carol D. & Bumpass, Larry L. & Shipley, Martin & Marks, Nadine F., 1997. "Social inequalities in health: Next questions and converging evidence," Social Science & Medicine, Elsevier, vol. 44(6), pages 901-910, March.
- Richard Disney & Sarah Bridges, .
"Debt and depression,"
06/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
- Angela A. Hung & Joanne Yoong, 2010. "Asking for Help: Survey And Experimental Evidence on Financial Advice And Behavior Change," Working Papers 714-1, RAND Corporation Publications Department.
- Adele Atkinson & Stephen McKay & Sharon Collard & Elaine Kempson, 2007. "Levels of Financial Capability in the UK," Public Money & Management, Chartered Institute of Public Finance and Accountancy, vol. 27(1), pages 29-36, 02.
- Brown, Sarah & Taylor, Karl & Wheatley Price, Stephen, 2005. "Debt and distress: Evaluating the psychological cost of credit," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 642-663, October.
- Wildman, John, 2003. "Income related inequalities in mental health in Great Britain: analysing the causes of health inequality over time," Journal of Health Economics, Elsevier, vol. 22(2), pages 295-312, March.
- Lea, Stephen E. G. & Webley, Paul & Levine, R. Mark, 1993. "The economic psychology of consumer debt," Journal of Economic Psychology, Elsevier, vol. 14(1), pages 85-119, March.
- Mark Taylor, 2011. "Measuring Financial Capability and its Determinants Using Survey Data," Social Indicators Research, Springer, vol. 102(2), pages 297-314, June.
- Cahit Guven, 2008.
"Reversing the Question. Does Happiness Affect Consumption and Savings Behavior?,"
2008_20, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
- Guven, Cahit, 2012. "Reversing the question: Does happiness affect consumption and savings behavior?," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 701-717.
- Cahit Guven, 2009. "Reversing the Question: Does Happiness Affect Consumption and Savings Behavior?," SOEPpapers on Multidisciplinary Panel Data Research 219, DIW Berlin, The German Socio-Economic Panel (SOEP).
- 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.
- Alex Bryson & Michael White, 2014. "Not So Dissatisfied After All? The Impact of Union Coverage on Job Satisfaction," CEP Discussion Papers dp1271, Centre for Economic Performance, LSE.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.