The new issue of the Economic Journal carries a fascinating study in the UK on the links between increased debt burdens and depression. Here’s the abstract of the paper:
Individuals exhibiting problems repaying their debt obligations also exhibit much worse psychological health. Selection into problem debt on the basis of poor psychological health accounts for much of this difference. The causality between problem debt and psychological health may be two-way. Using individual-level UK panel data, local house price movements exogenous to individual households are used to establish the causality from problem mortgage debt to psychological health. In addition, the social norm effects of problem debt are investigated using local bankruptcy and repossession rates. Results indicate there are sizeable causal links and social norm effects in the debt-psychological health relationship.
The study’s findings are somewhat in contrast to the recent work by Brendan Walsh on the Irish Economy which showed we were bearing up rather well, but to be fair Brendan didn’t look at this link explicitly. An ungated version of the paper by Dr John Gathergood of the University of Nottingham is here (.pdf), the tables at the back of the paper are worth going through if you’re feeling wonkish.