Debt and Health
Debt problems in the UK have recently become much more severe, especially for the lowest income groups, and we examine here their impact on health, using data from the national Families´ and Children´s Survey (FACS). We model the relationship between debt and health as a simultaneous two-way interaction, and find that debt levels have a negative effect on both physical and psychological health. We find that debt repayment structure, defined as the percentage of debt borrowed in high-interest categories, has an impact on health independent of the level of debt. The interaction between debt and health may aggravate the poverty trap, by pushing heavily-indebted low-income people into ill-health, which then makes it difficult for them to acquire or hold on to the steady jobs needed to ease their debt problems. We also find that worry has a negative influence on debt management capacity, and thence on health, which makes it more difficult for those caught in a debt trap to escape from it. Membership of credit unions tends to reduce worry, however, and thereby may facilitate escape from the debt-ill health spiral.
|Date of creation:||Apr 2008|
|Date of revision:||Apr 2008|
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- Richard Disney & Sarah Bridges & John Gathergood, .
"Housing Wealth and Household Indebtedness: Is there a Household ‘Financial Accelerator’?,"
06/01, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
- Richard Disney & Sarah Bridges & John Gathergood, 2006. "Housing Wealth and Household Indebtedness: Is there a Household 'Financial Accelerator'?," Working Papers 2006/12, Czech National Bank, Research Department.
- John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998.
"The Dynamic Effects of Health on the Labor Force Transitions of Older Workers,"
NBER Working Papers
6777, National Bureau of Economic Research, Inc.
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- Bridges, Sarah & Disney, Richard, 2010.
"Debt and depression,"
Journal of Health Economics,
Elsevier, vol. 29(3), pages 388-403, May.
- John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
- Amemiya, Takeshi, 1978. "The Estimation of a Simultaneous Equation Generalized Probit Model," Econometrica, Econometric Society, vol. 46(5), pages 1193-1205, September.
- Sarah Bridges & Richard Disney, 2004. "Use of credit and arrears on debt among low-income families in the United Kingdom," Fiscal Studies, Institute for Fiscal Studies, vol. 25(1), pages 1-25, March.
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