Debt trajectories and mental health.
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.
Department of Economics, University of Chile, Diagonal Paraguay 257, Santiago, 8330015, Chile. Electronic address: dhojman@fen.uchile.cl.
Daniel A
DA
Hojman
School of Economics and Business, Diego Portales University, Santiago, Chile.
Álvaro
Á
Miranda
Department of Economics, University of Chile, Santiago, Chile.
Jaime
J
Ruiz-Tagle
D000328:Adult; D000368:Aged; D002677:Chile / Q000453:epidemiology; D003863:Depression / Q000150:complications / Q000453:epidemiology / Q000209:etiology; D004467:Economics; D005260:Female; D006801:Humans; D008137:Longitudinal Studies; D008297:Male; D001523:Mental Disorders / Q000150:complications / Q000453:epidemiology* / Q000209:etiology; D008875:Middle Aged; D012959:Socioeconomic Factors
Credit; Debt; Depression; Over-indebtedness