Interest rate hikes pose mental health threat to people in debt

March 19, 2018, University of Nottingham
Interest rate hikes pose mental health threat to people in debt
Credit: University of Nottingham

Interest rate hikes by central banks can impact on the mental health of people in debt, according to a new study by experts from the Universities of Stirling and Nottingham.

Central banks around the world use interest rates to control how much people and businesses spend or invest, in order to maintain a low-inflation, stable economy.

However, research published in the Journal of Affective Disordersshows that changing interest rates to meet economic objectives can have consequences for .

Increased likelihood of mental health difficulty

Researchers from the universities of Stirling and Nottingham conducted a study involving more than 15,000 people in the UK. They found that when interest rates increased, those who were heavily indebted experienced an increased likelihood of mental difficulty. They did not find any effect on savers.

Lead researcher Dr. Christopher Boyce, a behavioural scientist at Stirling Management School, said their research – which is the first to explore whether interest rate changes directly influence mental health – has important implications for economic and social policy.

"Central banks have the task of maintaining economic stability, but it is important for central bankers to recognise that by manipulating economy-wide interest rates, there are likely to be serious consequences for some people's mental health," he said.

The researchers found that for each 1% increase in interest rates, there was a 2.6% increase in the incidence of experienced by those heavily in . UK-wide, researchers estimated each percentage point increase would result in 20,000 additional cases of mental health difficulty – at an overall cost to society of £156 million.

More support

They called for more support for those in debt and for banks to consider the impact of their decisions.

Professor Eamonn Ferguson from the School of Psychology led the study in Nottingham and said:"Our results show, for the first time, that central bank interest rate rises can have consequences for mental health. Mental health is increasingly being seen as an important marker of a countries development, and itself contributes to productivity and growth. Thus central banks should consider how negative effects on mental health, which may have arisen from their policies, may in turn affect the economy."

Important policy implications

"Our research has potentially important policy implications," continues Dr. Boyce. "Whilst it is important to avoid high unemployment and instability – which in themselves can be detrimental to mental health – central bankers need to understand that the tools they use to maintain can also have direct consequences to mental health.

"Low interest rates encourage the uptake of debt, potentially creating unsustainable debt levels and putting many at risk when there are future interest rate rises. When this happens, we need to ensure those in debt receive adequate support.

"One way to improve the economy, as others have argued, while at the same time reducing the mental health risk for individuals, would be to give people money in the form of a debt jubilee."

Explore further: 2008 Great Recession led to increase in obesity, diabetes and mental health issues

Related Stories

2008 Great Recession led to increase in obesity, diabetes and mental health issues

March 1, 2018
The 2008 Great Recession resulted in changes to individuals' health behaviour, with a significant increase in the likelihood of obesity, diabetes and mental health problems, according to a new study from City, University ...

Risk of mental health visits up in childhood cancer survivors

March 5, 2018
(HealthDay)—Survivors of adolescent cancer have higher rates of adverse mental health outcomes than the general population, according to a study published online Feb. 22 in Cancer.

Debt linked to mental health problems

September 26, 2013
New research, led by the University of Southampton, has shown that people in debt are three times more likely to have a mental health problem than those not in debt.

Research finds risk of suicide and mental illness increases during recession

November 6, 2015
The economic recession of 2008 – 2010 was followed by increases in rates of suicide, suicide attempts, and mental illness, a PolicyBristol report from a team led by academics at the University of Bristol has found.

Vaping should be part of support to help smokers with mental health conditions quit

November 16, 2017
A group of health bodies and charities has called for more to be done to help smokers with mental health conditions quit, including accessing e-cigarettes and other treatments.

Recommended for you

Researchers reveal link between hunger and mood, new study

September 25, 2018
It seems "hangry" isn't just a made-up term.

Baby sleeping in the parental bedroom not related to later behavioural problems

September 25, 2018
Sleeping in the parental bedroom as a baby is not related to sleeping problems or behavioural problems later in life. Moreover, there are indications that room-sharing may even be related to positive outcomes, such as improved ...

Gender 'nonconformity' takes mental toll on teens

September 25, 2018
(HealthDay)—American teens whose behavior, appearance or lifestyle do not conform to widely held views on what it is to be a "normal" male or female face a high risk for mental distress and drug abuse, new research warns.

To dispel myths, redirect the belief, study says

September 24, 2018
Beliefs can be hard to change, even if they are scientifically wrong. But those on the fence about an idea can be swayed after hearing facts related to the misinformation, according to a study led by Princeton University.

Children found capable of using the 'wisdom of crowds'

September 24, 2018
Children, like adults, can improve their response to difficult tasks by the power of group work, new research led by the University of Bristol has found.

Leading addiction experts call for more neuroscience research on long-term recovery

September 24, 2018
September is addiction recovery month, and, in the midst of the current opioid epidemic, it's an apt moment for addiction research experts to map the future path forward for a long-term recovery strategy for substance abuse. ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.