Broke, Ill, and Obese: The Effect of Household Debt on Health
AbstractWe analyze the effect of household indebtedness on different health outcomes using data from the German Socio-Economic Panel from 1999–2009. To establish a causal effect, we rely on (a) fixed-eff ects methods, (b) a subsample of constantly employed individuals, and (c) lagged debt variables to rule out problems of reverse causality. We apply different measures of household indebtedness, such as the percentage shares of household income spent on consumer credit and home loan repayments (which indicate the severity of household indebtedness) and a binary variable of relative overindebtedness (which indicates a precarious debt situation). We find all debt measures to be strongly correlated with health satisfaction, mental health, and obesity. Controlling for unobserved heterogeneity and reversed causality we find evidence that household debt also causally deteriorates physical and mental health. However, there is no causal effect on being obese.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0234.
Length: 30 pages
Date of creation: Dec 2010
Date of revision:
Other versions of this item:
- Matthias Keese & Hendrik Schmitz, 2010. "Broke, Ill, and Obese: The Effect of Household Debt on Health," SOEPpapers on Multidisciplinary Panel Data Research 350, DIW Berlin, The German Socio-Economic Panel (SOEP).
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- I12 - Health, Education, and Welfare - - Health - - - Health Production
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- Ada Ferrer-i-Carbonell & Paul Frijters, 2004.
"How Important is Methodology for the estimates of the determinants of Happiness?,"
Royal Economic Society, vol. 114(497), pages 641-659, 07.
- Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
- Averett, Susan L. & Smith, Julie K., 2012. "Indebted and Overweight: The Link Between Weight and Household Debt," IZA Discussion Papers 6898, Institute for the Study of Labor (IZA).
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