The Effect of Over‐Indebtedness on Health: Comparative Analyses for Europe

Abstract

Summary The aim of this paper is twofold. First, it tests whether an effect of over‐indebtedness on self‐assessed health exists. Fixed‐effects panel regression models based on panel data for 25 European countries show that being in arrears increases the likelihood of reporting bad/very bad health. However, effects are weak in terms of economic significance. The second research question focuses on the effect heterogeneity of overindebtedness among different European countries. It asks whether country‐level factors moderate the effect of problematic debt on health. These macro‐variables are the accessibility of health services, debt management and debt discharge regulations, dispute resolution with banks/insurance companies, and the social stigma of being over‐indebted/in debt. Descriptive analyses showed that some aspects of the legal debt‐collection process (e.g., higher costs of debt collection) are associated with a stronger effect of over‐indebtedness on subjectively assessed poor health. There is also some evidence that easier dispute resolution with banks and insurance companies is correlated with smaller effects of over‐indebtedness on health.

Household debt and depressive symptoms among older adults in three continental European countries

“…This he interpreted as evidence that local (neighbourhood) social norms are important in the debt–depression nexus, possibly as a result of reduced shame and stigma about debt in areas where it was more common. Consistent with this, Angel (2016), in a study of associations between self-rated health (which is associated with depression) and indicators of over-indebtedness (arrears, etc .) across 25 EU countries, reported weak descriptive evidence that countries with a stronger association between self-reported health and over-indebtedness had lower proportions of persons with arrears.…”

Debt and Overindebtedness: Psychological Evidence and its Policy Implications

“…Low income and high necessary expenditure amount to poverty; and although poverty is always present in societies, when it is more prevalent, debt problems are greater. The trend towards greater inequality in recent decades has been accompanied by rising levels of debt and debt problems (e.g., De Vita & Luo, in press), and countries with higher levels of inequality have more people with debt problems (consider Table 1 of Angel, 2016, for comparisons of European countries). In psychological terms, the persistent association of debt with poverty supports the intuitive view that debt (as distinct from credit use) is an unwanted state, and if it is actively chosen, that it is only a last resort, even given the heavy marketing of credit.…”

Relationship Between Debt and Depression, Anxiety, Stress, or Suicide Ideation in Asia: A Systematic Review

“…Higher debt/income ratio is significantly related to worsening health and self-reported health with health behaviors and risk explaining part of the association between debt, stress about debt, and health (Drentea and Lavrakas, 2000 ). According to Angel ( 2016 ), among several European countries, those living in households with debt for the past 12 months significantly increase the chances of reporting bad health by 22.6% compared to those living without debt, and there is evidence that debt collection costs strengthen the relationship between debt and health, while the evidence of the effect of social stigma is weak.…”