Debt and Health

Pamela Lenton and Paul Mosley ()
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Paul Mosley: Department of Economics, The University of Sheffield

No 2008004, Working Papers from The University of Sheffield, Department of Economics

Abstract: 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.

Keywords: Debt; Health; Random effects ordered probit models (search for similar items in EconPapers)
JEL-codes: G11 I31 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2008-04, Revised 2008-04
New Economics Papers: this item is included in nep-cfn and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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