The Interrelation Between Debt and Mental Health

In recent years, many developing and developed nations have witnessed a substantial surge in overall personal consumer debt. Factors such as the rise of money lending and the expansion of the credit market have simplified access to credit for individuals, leading to a situation where many households' total debt exceeds their annual income. Given the prevalence of debt and its potential ramifications on overall health and mental well-being, it is crucial to delve into the connection between mental health and indebtedness.

Debt and Mental Health

Extensive research has consistently demonstrated a correlation between financial strain, including debt, and mental health challenges. Debt can profoundly impact an individual's psychological well-being, diminishing their quality of life and potentially affecting their financial future and life trajectory.

Debt Prevalence

Individuals in their younger years, particularly those between the ages of 20 and 30, tend to carry the most significant debt burden, with approximately 60% to 70% holding debt. This figure contrasts with only 39% among individuals aged 60 to 64. As individuals approach 30, their debt increases, while only 11% of those over 80 have debt.

Impact of Debt on Mental Health

Studies have established a strong link between mental health and financial health. Indebtedness substantially increases the likelihood of depressive symptoms. Individuals living below the poverty line are 1.5 times more prone to experiencing depression compared to those above the poverty line. This increased risk is attributed to the diminished quality of life and psychological distress associated with debt repayment.

Furthermore, debt is associated with anxiety and lower scores on mental health assessments. The burden of debt is directly proportional to psychological distress, and individuals facing foreclosure or bankruptcy experience the most significant mental distress.

Types of Debt and Their Effects

A study conducted in 2016 revealed that emotional distress is most strongly associated with the following types of debt:

• Non-mortgage debt
• Late mortgage debt
• Credit card debt

This finding is relevant considering the recent trend of spending outpacing income growth for many families. Debt accumulated due to unavoidable events or out of necessity, rather than for property investments, tends to be particularly stress-inducing. This is especially pertinent in light of the increased borrowing many families were forced into during the COVID-19 pandemic.

Behavioral Changes Due to Debt

Individuals with debt often report altering their behaviors to cope with their financial responsibilities. This can include skipping medical care or housing payments and modifying consumer purchasing habits. Evidence suggests that as debt burden decreases, depressive symptoms also decrease.

Debt and Suicide Risk

The most severe potential consequence of depression is suicide. Research has shown that debt played a significant role in 11% of men exhibiting suicidal behavior. An overwhelming sense of hopelessness, prevalent among some debtors, seems to be the link between debt and suicide risk. Bankruptcy experienced within two years strongly predicted suicide attempts.

If you are experiencing suicidal thoughts, please contact the National Suicide Prevention Lifeline at 988 for support and assistance from a trained counselor. If you or a loved one are in immediate danger, call 911. For more mental health resources, visit the National Helpline Database.

Physical Health Implications of Debt

A higher debt-to-income ratio is associated with poor physical health and health-related behaviors such as diet and exercise. In European countries, the presence of debt in a household increased the chances of self-reported bad health by 23%.

Increased Risk of Chronic Disease

Indebted individuals face an elevated risk of hypertension and other chronic diseases. This relationship is complicated by the fact that depression itself increases the risk of illnesses like hypertension. Additionally, skipped medical care and reduced health-seeking behaviors among debtors further contribute to poor physical health.

Student Debt and Its Impact

In the United States alone, student debt reached a staggering $1.7 trillion in 2020, marking a 4% increase from the previous year. Research indicates a correlation between student debt and compromised physical and mental health, particularly among Black or Hispanic/Latino individuals.

Student debt has significant financial implications throughout a person's life. Households headed by young, college-educated adults without student debt have approximately seven times the net worth of households with student debt. Those without a bachelor's degree and no student debt accumulated roughly nine times as much wealth compared to households with student debt.

While income increases with higher education level, indebtedness predicts lower net worth. This difference is not solely due to student loan debt, as it also predicts other forms of debt, such as credit card and car loans.

Parental Debt and Its Effects on Child Well-Being

Social scientists have recently explored the impact of parental debt on child-rearing behavior and child well-being. Studies suggest that debt-related stress can lead to preoccupied parents who work longer hours to repay debt, resulting in less time, attention, and quality activities devoted to children at home.

For women with young children, debt-related worry is the strongest independent socioeconomic predictor of depressive symptoms. Economic hardship is linked to poorer parental health, harsher parenting, and lower-quality parent-child relationships, potentially leading to compromised socio-emotional development in the child.

Unsecured family debt is associated with increased behavioral problems in children, particularly among Black and lower socio-economic families. However, mortgage and student loan debt appear to have less impact on children's mental health and behavior.

Conclusion

The rise in consumer debt and its impact on mental health warrant attention from researchers and policymakers. The financial devastation caused by the global pandemic of 2020 further exacerbates this issue. Understanding the psychological burden of unsecured debt and its implications for individuals, families, and society as a whole can lead to changes in public policy and interventions aimed at mitigating the negative effects of debt on mental well-being.