The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Personal Debt and Psychological Health

  • John Gathergood
Reference work entry


Problematic personal debts and associated outcomes, such as bankruptcy and foreclosure, lead to significant declines in psychological health. This article summarises the recent literature and discusses the key issues in measurement and causality. Medical studies show that problem debts are associated with depression, self-harm and even suicide. Recent studies using econometric techniques show that some of the association in self-reported data is due to perception bias. Quasi-experimental studies using data from the housing crises show the onset of problem debt causes deterioration in psychological health, including effects upon physical health and health behaviours.


Anxiety Bankruptcy Consumer credit Debt Depression Finance Foreclosure Health Health behaviours Mental illness Mortgage debt Psychological health Repossession Suicide 

JEL Classification

I310 D1 D140 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • John Gathergood
    • 1
  1. 1.