Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/150895
Authors: 
Keese, Matthias
Schmitz, Hendrik
Year of Publication: 
2010
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research 350
Abstract: 
We analyze the effect of household indebtedness on different health outcomes using data from the German Socio-Economic Panel from 1999-2009. To establish a causal effect, we rely on (a) fixed-effects methods, (b) a subsample of constantly employed individuals, and (c) lagged debt variables to rule out problems of reverse causality. We apply different measures of household indebtedness, such as the percentage shares of household income spent on consumer credit and home loan repayments (which indicate the severity of household indebtedness) and a binary variable of relative overindebtedness (which indicates a precarious debt situation). We find all debt measures to be strongly correlated with health satisfaction, mental health, and obesity. Controlling for unobserved heterogeneity and reversed causality we find evidence that household debt also causally deteriorates physical and mental health. However, there is no causal effect on being obese.
Subjects: 
Debt
health satisfaction
mental health
obesity
fixed-effects
JEL: 
D12
D14
I12
Document Type: 
Working Paper

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