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Debt and depression

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  • Bridges, Sarah
  • Disney, Richard

Abstract

We examine the effect of household financial indebtedness on psychological well-being using a large household survey of families with children in Britain. Existing studies that find a link between debt and depression tend to utilise small and highly selective samples of people and only self-reported measures of financial stress, responses to which are likely to correlate with subjective measures of health. From additional household data, we can construct a variety of 'objective' quantitative measures of financial stress in order to validate self-reported measures. We show that, although there is a positive association between subjective measures of financial well-being and psychological well-being, individuals differ in their psychological response to objective household financial situations. We also examine how the potential simultaneity of financial and psychological health might be handled.

Suggested Citation

  • Bridges, Sarah & Disney, Richard, 2010. "Debt and depression," Journal of Health Economics, Elsevier, vol. 29(3), pages 388-403, May.
    • Handle: RePEc:eee:jhecon:v:29:y:2010:i:3:p:388-403
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