Causal effect of debt on mental and physical health
In the past 20 years, the United Kingdom has experienced a substantial rise in levels of household indebtedness. This has mostly been driven by a reduction in income in real terms caused by stagnating wages over the years coupled with an increasing cost of living. So far, non-causal evidence shows that people with debts and those experiencing financial distress are more likely to have poor mental and physical health compared to the general population. However, the health implications caused by household indebtedness are not well known due to lack to of reliable longitudinal data to undertake causal inference, with a particular reliance on self-reported information. In turn, this has limited the development of targeted policies aimed at mitigating the adverse health impacts of household indebtedness. To identify the causality of debts on mental and physical health requires the use of robust longitudinal data and causal methods.
This project will utilise the recent data linkage between credit reference agency and the longitudinal Understanding Society Innovation Panel data (CRA-IP) and causal methods to address the methodological problems that have restricted past studies and could advance the understanding of this important public health issue. This will provide insights about the data quality of CRA-IP dataset and the extent to which different types and levels of debt contribute to poor mental and physical health. Further, the evidence obtained will help develop and enhance debt response policies and support pathways aimed at mitigating the adverse health impacts of debts, especially among vulnerable borrowers.
