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Buried by debt: study links debt and mortality rates

Buried by debt
[Yup, that’s how it feels sometimes/Getty Images]

The expression “buried in debt” indicates that someone is swamped with bills, and perhaps struggling to lift themselves out of the red.

But the expression could also take on a more morbid meaning thanks to a new study that says there is a causal relation between financial strain and being six feet under.

The findings from the University of Colorado Denver indicate that bad credit and severely delinquent debts lead to an increased risk of death. Conversely, those with better credit scores and smaller amounts of delinquent debt had a lower probability of death.

In fact, when someone’s credit rating received a bump of 100 points, their risk of dying declined by 4.38 per cent.

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Furthermore, going from having no severely delinquent accounts to having any, increased the mortality risk by five per cent.

“Across the distribution, the groups with the best (credit) scores have a lower probability of death, whereas poor scores are associated with higher mortality relative to the reference group,” write the authors in the report.

The research also indicated that the effect is more pronounced in the short-term, as individuals who fail to pay their debts are “far more likely” to die from “immediate debt shock” than a lingering inability to clear their bills.

To come up with the findings, the authors used data from the U.S. Federal Reserve’s Consumer Credit Panel, which is a nationally representative random sample of American consumers and their households.

The quarterly panel contains data from 1999 to the present. It collects statistics about credit balances, delinquencies, age, geographic information, as well as the quarter when a participant died.

To rule out the potential that poor health may be in fact leading individuals to fall into debt, the researchers looked at mortgage delinquency data from the Great Recession. The statistics were drawn from the Residential Mortgage Servicing Database from McDash Analytics.

In the end, the researchers found similar results.

“Debt resulting from the financial crisis has had lasting effects on health that are substantial enough to increase mortality rates,” co-author and economist Laura Argys said in a press release.

While it may seem obvious that being severely in debt can have negative health outcomes, there is research to back it up.

The researchers suggested that financial strain causes elevated levels of stress, which has been linked to behaviours such as poor nutrition and substance abuse.

They also pointed to findings that suggest that financial insecurity may reduce health care use, adherence to treatment plans and, in turn, lead to worse health outcomes.

Americans who are in the red also have to face debt collectors, which has been found to be a stressful process on its own because of its “adversarial nature.”

The report suggests that fiscal policies should be implemented that shelter people from the effects of economic downturns.

As an example, the researchers offered recent studies that indicated that expanding public health insurance can improve peoples’ financial situation.

“Any policy that has an impact on individual financial wellbeing also has an impact on individual health, Andrew Friedson, co-author and economist, said in the press release, adding that they can have “long-term public health consequences.”

“That means economic policy is, by extension, health policy.”