The true cost of debt: People struggling to pay loans are 'three times more likely to have mental health problems'People with debt problems find stress and anxiety spills over into other areas of their livesMore severe mental health effects are found among people who are late with housing or rent paymentsIn parts of the country where bankruptcy and repossession are more common, the impact of debt on people’s mental health is less severe
09:07 GMT, 13 September 2012
Hard-up people struggling to pay their debts are more than twice as likely to have mental health problems or suffer with severe anxiety, according to a study.
Among people with the most difficult debt challenges, including arrears on mortgage or rent payments, the rate of mental health problems rises to three times higher than in the general population, scientist said.
The research by Dr John Gathergood, of the University of Nottingham, found that people who face tough debt problems find the stress and anxiety spills over into other areas of their lives.
Stigma: The stress caused by financial difficulties is exacerbated if debt is rare in your area, due to the compounding effects of social stigma
He said: 'One striking finding of my research is that many people with debt problems describe feelings of being unable to concentrate on day-to-day activities or make normal decisions. This has wider effects on their attitudes and general health.”
But in parts of the country where bankruptcy and repossession are more common the impact of debt on people’s mental health is less severe.
Dr Gathergood believes this may result from a ‘social norm’ effect, where people experience less impact of negative events when they are more common among their peer group.
The ‘social norm’ effect occurs because the stigma around debt problems is lower in areas where they are more common, it is claimed.
The study analysed data on the financial position and mental health characteristics of roughly 10,000 people in the UK between 1991 and 2008.
It estimated the mental health effects of being unable to meet debt payments on unsecured debt, such as credit cards, as well as mortgage and rent payments.
The research measured people’s mental health using data on recognised medical conditions and responses to a series of 12 questions known as the ‘General Health Questionnaire’, asking people to describe their feelings and experiences, including sleeplessness, self-confidence and ability to concentrate.
Dr Gathergood also investigated how the effect of debt on mental health differed depending on how common bankruptcy and repossession are in the area in which the person with problem lives.
Repercussions: The anxiety caused by debts was found to spill over into other areas of people's lives
He found that higher local rates of bankruptcy and repossession are associated with less impact on people’s mental health.
'My research clearly shows that problem debt causes worse mental health – but where people live makes a big difference,' Dr Gathergood said.
'If an indebted individual lives in an area where debt problems are more common, the impact on their mental health is much less severe.'
People who face problems paying their unsecured debts, which made up 15 per cent of the study, are more likely to suffer anxiety and say that they are experiencing adverse effects on their feelings and emotions – including feeling constantly under strain, hopeless and incapable of decision-making.
More severe mental health effects are found among people who are late with housing or rent payments, particularly those with arrears on their mortgage.
Among people with mortgage arrears, one in five suffers a recognised medical impact in the form of depression, severe anxiety and related mental health effects.
As well as these problems, falling house prices and negative equity amplify the negative effects of unpayable mortgage debt on mental health, the team claim.
The study was published in the latest issue of the Economic Journal.