Debt trajectories and mental health

Soc Sci Med. 2016 Oct:167:54-62. doi: 10.1016/j.socscimed.2016.08.027. Epub 2016 Aug 20.

Abstract

In the last few decades, there was a marked increase in consumer debt in the United States, Latin America and other emerging countries, spurring a debate about the real costs and benefits of household credit. Using a unique longitudinal dataset with detailed health and balance sheet information from a large sample of 10,900 Chilean households we study the relationship between debt trajectories in a three-year time window and mental health. We find that depressive symptoms are higher for those who have been persistently over-indebted, followed by those who transit from moderate to high debt levels. We also find that those who transition from over-indebtedness to moderate debt levels have no additional depressive symptoms compared to those with trajectories of moderate debt throughout (never over-indebted). This suggests that the debt-related contribution to depressive symptoms vanishes as debt levels fall. The association between debt and depressive symptoms seems to be driven by non-mortgage debt -primarily consumer credit- or late mortgage payments; secured debt (secured by collateral) per se is not associated with depressive symptoms. Policy interventions to reduce the negative association of over-indebtedness on mental health are discussed.

Keywords: Credit; Debt; Depression; Over-indebtedness.

MeSH terms

  • Adult
  • Aged
  • Chile / epidemiology
  • Depression / complications
  • Depression / epidemiology
  • Depression / etiology
  • Economics*
  • Female
  • Humans
  • Longitudinal Studies
  • Male
  • Mental Disorders / complications
  • Mental Disorders / epidemiology*
  • Mental Disorders / etiology
  • Middle Aged
  • Socioeconomic Factors