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To say that there is a relationship between a person’s financial situation (or perceived situation) and their mental health is a fairly self-sufficient claim. A person or family’s financial security is one of many essential pillars that support their mental or physical health, and hardship or uncertainty can lead to a myriad of problems not just in practical terms, but psychologically as well. Understandably, with the shadow of the 2008 Financial Crisis still lingering, research and analysis of associations between financial health and mental health have focused predominantly on socio-economic factors such as unemployment, income and to a lesser extent, demographical differences such as race or locality. Considering 1.3 million people in the UK alone were made redundant between April 2008 and November 2009 – two-thirds of whom were paid on average 28% less annually once they found employment again, according to a report from the Chartered Institute of Personnel and Development (CIPD,) it is clear to see why unemployment and income were chosen by researchers as key variables in studying financial and mental health. 

However, new and ongoing research has and continues to prove that to ignore personal debt in such research is to ignore a major part of the overall picture. The following 5 paper project endeavours to establish beyond a doubt, the significance of personal, unsecured debt in regards to mental health. 

The purpose of this opening paper will be to outline how significant the problem of unsecured debt is, and its role in explaining the relationship between one’s financial situation and their mental health – with reference to the works of all central figures in this live, exciting field of research. This paper will also outline the broad strokes of the direction this project will take, and the specific focuses of papers to follow in the future.  


 The Debt Problem and It’s Significance. 

Unsecured debt levels in the UK are still rising continuously if not as dramatically as in the immediate aftermath of 2008. At this time of writing, August 2017, the total unsecured debt outstanding in the UK is £200.882 billion, equating to over £12,000 per family. To be clear, it is not the intention of these papers to undermine the associations between socio-economic factors like unemployment, low income and mental health problems – only to make clear the significance of debt within this picture. This section will outline the relationships between unemployment, income and mental health problems; show the role of debt in these relationships; and as a result make clear that, as recent research suggests, debt is a key variable in its own right in regard to explaining the wider, general relationship between financial situation and mental health.  

The relationship between unemployment and low-income with mental health problems is relatively self-explanatory. Financial restrictions faced by those with low disposable income or the sudden, negative changes in circumstances faced by someone recently made redundant have numerous knock-on effects that can be damaging to a person’s mental health. For example, sacrifices in lifestyle, social/financial exclusion and having to go without essentials. The foundations of examining low income and unemployment relationship with mental health problems take root in the 1990s, pioneered by Ioannis Theodossiou, and even a google search will provide masses of data that would appear to support associations. 

However, what has been largely ignored until recently is the role of debt. The body of evidence on the associations between debt and mental health continues to grow, and recent findings suggest that debt’s significance cannot be understated. By no means are all people whose mental health is affected by their financial situation either unemployed or on a low income. Evidence suggests that people in full-time employment, even on mid-high income are just as vulnerable to mental health problems as anyone else. In a 2016 survey of 40,000 fully employed households conducted by the University of Essex, 21% of respondents reported that they are ‘just about managing’ financially, while a further 5% said that they are ‘finding things difficult.’ If we consider that this sample is representative of the entire nation, over one-quarter of the British workforce are, to some extent, experiencing financial insecurity. On its own, this proves little – these households could primarily be in low-income employment after all. Yet, in a similar study conducted by the Money and Mental Health Policy Institute, when asked: “In your opinion has your financial situation made your situation worse?”  two-thirds of high earning par (defined as £1000 or more per week) participants answered yes. This suggests that mental health problems are indiscriminate in terms of income, an increasingly popular hypothesis amongst experts and researchers.  

In 2008, Jenkins and Meltzer found that once traditional odds-ratio tests (aimed at establishing links between income and mental health disorders) were adjusted to include personal debt levels, the relationship between income, unemployment and mental health attenuate. Building on this finding, Jenkins – working in collaboration with the Government Office for Science on the Mental Capital and Wellbeing Foresight Report – has since established personal debt as the strongest financial risk factor for mental health disorders. In numerous odds-ratio studies, the report concluded that when all other factors including income are accounted for, the effect of debt is still strong; but when all other factors including debt are accounted for, the effect of low income largely disappears. As such, there is evidence to suggest debt is the financial variable with the highest correlation to mental disorders – this will be examined and analyzed in greater detail in future papers. 

 What Problems, What Debts? 

 What mental health problems, specifically then will these essays be primarily discussing; and is this type of unsecured debt relevant?  

Paper two of this project will be focused specifically on the ‘vicious cycle’ of debt, types of common mental disorders (CMD) associated with debt and break this down in terms of internal and external responses as well as looking at age and gender-based responses. For now, as an overview, work lead by Dr. Tom Richardson asserts that the primary CMD’s associated with personal debt are three of the most serious – anxiety, depression and suicidal thoughts. Following on from their odds-ratio studies, Jenkins and Meltzer found that debt was also a direct, independent correlate of depression – those in debt were 2.98x more likely to suffer depression than those debt-free. Furthermore, the MMHPI found in 2016 that people in debt that have been clinically diagnosed with depression are 4 times more likely than those that are debt free to still suffer from the disorder even after 18 months of clinical treatment. Clearly there is a distinction between those in debt and those not in debt in terms of depression, and as future papers will show this is the case for other CMD including but not limited to anxiety and suicidal thoughts.   

In regards to the relevance of types of debt, again, this will be examined in detail in future papers. In brief, there is considerable disagreement amongst researchers on the importance of types of debt. Jenkins, contrary to her own hypothesis, found that it is the total number of debts that matter, not the type of debt. The argument being that the more a person feels they are overstretched and have numerous creditors to deal with, the more stressed they become However, Drentea argues that types of debt do matter and that payday loans and credit card balances trigger the most anxiety. Both viewpoints will be considered later on, and both have solid supporting evidence. Overall though, recent evidence appears to side with Drentea, in that credit card balances seem to be having a particularly dramatic impact on mental health. Currently, credit cards account for £68.5 billion out of the total £200.882 billion of unsecured debt in the UK – comparatively in the United States, they account for $1trillion of the outstanding $3.1 trillion. This, though highlighting the severity of credit culture, doesn’t necessarily suggest credit has a more profound effect on mental health than secured debts like utilities and mortgages. However, another international comparison may well achieve this.  In 2010 Chile was branded the ‘Depression Capital of the World.’  Despite boasting a rapidly growing middle class and millions of people being lifted from poverty each year, 17% of all Chilean adults suffered from clinical depression in 2010. Of course, it would be impossible to narrow this epidemic down to one causal factor – but certain figures suggest credit balances played a significant part. Consumer credit in Chile rose by 12% each year between 2003 and 2008, and by 2008 there were 19 million credit cards attributed to a population of only 16 million people. Again, papers to follow will assess both positions – but the evidence is mounting to suggest that credit cards appear to have a special role in this overall picture of debt and mental health.  


Researched and written by Craig Lynch.