Hostname: page-component-78c5997874-94fs2 Total loading time: 0 Render date: 2024-11-06T09:07:48.108Z Has data issue: false hasContentIssue false
  • English
  • Français

The Legacy of Economic Recession in Terms of Over-Indebtedness: A Framework and Review of the Evidence

Published online by Cambridge University Press:  22 September 2020

Heikki Hiilamo
Heikki Hiilamo*
Affiliation:
Faculty of Social Sciences, University of Helsinki, Finland Finnish Institute for Health and Welfare, Helsinki, Finland E-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

With the expansion of credit, low interest rates and overly optimistic expectations about future economic and housing price developments, mortgage lending soared in most OECD countries in the run-up to the 2008 global economic crisis. The crisis revealed the hidden epidemic of over-indebtedness, which continues to overshadow the lives of millions in rich countries. In the wake of the global economic crisis, the household debt crisis led to worsening economic conditions and put pressure on government finances, which caused further income shocks in the form of austerity measures such as social welfare cuts and higher taxes. This article is based on a scoping review aimed at summarising and reflecting on the available literature. It analyses the effects of over-indebtedness on individuals and societies across six OECD countries: Finland, Germany, the Netherlands, Norway, the UK and the US.

Keywords

Over-indebtednesseconomic crisissocio-economic positionbankruptcy
Type
Themed Section: A Hostile Decade for Social Policy: Economic Crisis, Political Crisis and Austerity 2010-20
Information
Social Policy and Society , Volume 20 , Issue 1 , January 2021 , pp. 111 - 124
Copyright
© Cambridge University Press 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Armour, J. and Cumming, D. (2008) ‘Bankruptcy law and entrepreneurship’, American Law and Economics Review, 10, 2, 303–50.CrossRefGoogle Scholar
Averett, S. and Smith, J. (2014) ‘Financial hardship and obesity’, Economics and Human Biology, 15, 201–12.CrossRefGoogle ScholarPubMed
Berger, L. M. and Houle, J. N. (2016) ‘Parental debt and children’s socio-emotional well-being’, Pediatrics, 137, 2, e2015305, 1–10, doi: 10.1542/peds.2015-3059.CrossRefGoogle Scholar
Blomgren, J. K., Maunula, N. and Hiilamo, H. (2016) ‘Over-indebtedness and chronic disease: a linked register-based study of Finnish men and women in 1995–2010’, International Journal of Public Health, 61, 5, 535–44, doi: 10.1007/s00038-015-0778-4.CrossRefGoogle ScholarPubMed
Blomgren, J. K., Maunula, N. and Hiilamo, H. (2017) ‘Do debts lead to disability pension? Evidence from a 15-year follow-up of 54 000 Finnish men and women’, Journal of European Social Policy, 27, 2, 109–22.CrossRefGoogle Scholar
Brzoska, P. and Razum, O. (2008) ‘Indebtedness and mortality: analysis at county and city levels in Germany’, Gesundheitswesen, 70, 7, 387–92.CrossRefGoogle ScholarPubMed
Bunn, P. and Rostom, M. (2015) Household Debt and Spending in the United Kingdom, Bank of England Working Paper No. 554, https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2015/household-debt-and-spending-in-the-uk.pdf?la=en&hash=BF951A2950B352C990518B57DFE4C3C6CBDB3741 [accessed 26.06.2019].Google Scholar
Campbell, J., Giglio, S. and Pathak, P. (2011) ‘Forced sales and house prices’, American Economic Review, 101, 5, 2108–31.CrossRefGoogle Scholar
Civic Consulting of the Consumer Policy Evaluation Consortium (CPEC) (2013) The Over-Indebtedness of European Households: Updated Mapping of the Situation, Nature and Causes, Effects and Initiatives for Alleviating Its Impact. Final Report, Part 1. Berlin: Civic Consulting of the Consumer Policy Evaluation Consortium, https://ec.europa.eu/info/sites/info/files/final-report-on-over-indebtedness-of-european-households-synthesis-of-findings_december2013_en.pdf [accessed 26.06.2019].Google Scholar
Clayton, M., Liñares-Zegarra, J. and Wilson, J. O. (2015) ‘Does debt affect health? Cross-country evidence on the debt-health nexus’, Social Science and Medicine, 130, 51–58.CrossRefGoogle ScholarPubMed
Cuesta, M. B. and Budría, S. (2015) The Effects of Over-Indebtedness on Individual Health, IZA Discussion Paper No. 8912, http://ftp.iza.org/dp8912.pdf [accessed 26.06.2019].Google Scholar
Desmond, M. (2016) Evicted: Poverty and Profit in the American City, New York: Broadway.Google Scholar
Dew, J. (2011) ‘The association between consumer debt and the likelihood of divorce’, Journal of Family and Economic Issues, 32, 4, 554–65.CrossRefGoogle Scholar
Dwyer, R. (2018) ‘Credit, debt, and inequality’, Annual Review of Sociology, 44, 237–61.CrossRefGoogle Scholar
Dwyer, R. E., McCloud, L. and Hodson, R. (2012) ‘Debt and graduation from American universities’, Social Forces, 90, 4, 1133–55.CrossRefGoogle Scholar
Eurofound (2012) Household Debt Advisory Services in the European Union, European Foundation for the Improvement of Living and Working Conditions, https://www.eurofound.europa.eu/sites/default/files/ef_publication/field_ef_document/ef1189en.pdf [accessed 26.06.2019].Google Scholar
European Commission (2008) Towards a Common Operational European Definition of Over-Indebtedness, Brussels: European Commission, http://www.oee.fr/files/study_overindebtedness_en.pdf [accessed 26.06.2019].Google Scholar
Federal Deposit Insurance Corporation (FDIC) (2017) FDIC National Survey of Unbanked and Underbanked Households, Washington, D.C.: Federal Deposit Insurance Corporation, https://www.fdic.gov/householdsurvey/2017/2017report.pdf [accessed 26.06.2019].Google Scholar
Fondeville, N., Özdemir, E. and Ward, T. (2010) Over-indebtedness: New Evidence from the EU-SILC Special Module, European Commission, Social Europe Research Note 4.Google Scholar
Goode, J. (2012a) ‘Brothers are doing it for themselves?: men’s experiences of getting into and getting out of debt’, The Journal of Socio-Economics, 41, 327–35.CrossRefGoogle Scholar
Goode, J. (2012b) ‘Feeding the family when the wolf’s at the door: the impact of over-indebtedness on contemporary foodways in low-income families in the UK’, Food and Foodways, 20, 1, 8–30.CrossRefGoogle Scholar
Henretta, J. C. and Campbell, R. T. (1978) ‘Net worth as an aspect of status’, American Journal of Sociology, 83, 5, 1204–23.CrossRefGoogle Scholar
Hiilamo, H. (2018) Household Debt and Economic Crises: Causes, Consequences and Remedies, Cheltenham: Edward Elgar.CrossRefGoogle Scholar
Houle, J. N. (2014) ‘Disparities in debt: parents’ socioeconomic resources and young adult student loan debt’, Sociology of Education, 87, 1, 53–69.CrossRefGoogle Scholar
Jameton, A. (1984) Nursing Practice: The Ethical Issues, Upper Saddle River, NJ: Prentice Hall.Google Scholar
Jansen, D.-J., Mosch, R. and van der Cruijsen, C. (2013) When Does the General Public Lose Trust in Banks?, DNB Working Paper No. 402 (November), https://www.dnb.nl/binaries/working%20Paper%20402_tcm46-299617.pdf [accessed 26.06.2019].CrossRefGoogle Scholar
Keene, D. E., Cowan, S. K. and Baker, A. C. (2015) ‘“When you’re in a crisis like that, you don’t want people to know”: mortgage strain, stigma, and mental health’, American Journal of Public Health, 105, 5, 1008–12.CrossRefGoogle Scholar
Lehtonen, I. (2016) Periytyvätkö velan vaikutukset? Vanhempien ylivelkaantumisen yhteys lasten toimeentulotuen saamiseen [Are the Effects of Debt Inherited? The Link between Parents’ Over-Indebtedness and Child Support], Department of Social Research, University of Helsinki, https://helda.helsinki.fi/bitstream/handle/10138/167194/Lehtonen_Yhteiskuntapolitiikka.pdf?sequence=2&isAllowed=y [accessed 26.06.2019].Google Scholar
Lenton, P. and Mosley, P. (2008) Debt and Health, Sheffield Economic Research Paper Series, University of Sheffield, https://www.sheffield.ac.uk/polopoly_fs/1.105541!/file/SERP2008004.pdf [accessed 26.06.2019].Google Scholar
Majamaa, K., Sarasoja, L. and Rantala, K. (2017) ‘Viime vuosien muutokset vakavissa velkaongelmissa: analyysi velkomustuomioista’ (Changes in serious debt problems in recent years: an analysis of debt judgments), Yhteiskuntapolitiikka, 62, 6, 676–86.Google Scholar
Melzer, B. (2017) ‘Mortgage debt overhang: reduced investment by homeowners at risk of default’, Journal of Finance, 72, 2, 575–612.CrossRefGoogle Scholar
Mertens, D. (2017) ‘Borrowing for social security? Credit, asset-based welfare and the decline of the German savings regime’, Journal of European Social Policy, 27, 5, 474–90.CrossRefGoogle Scholar
Mian, A. and Sufi, A. (2015) House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again, Chicago: University of Chicago Press.Google Scholar
Munn, Z., Peters, M., Stern, C., Tufanaru, C., McArthur, A. and Aromataris, E. (2018) ‘Systematic review or scoping review? Guidance for authors when choosing between a systematic or scoping review approach’, BMC Medical Research Methodology, 18, 143.CrossRefGoogle ScholarPubMed
Münster, E., Rüger, H., Ochsmann, E., Letzel, S. and Toschke, A. M. (2009) ‘Over-indebtedness as a marker of socioeconomic status and its association with obesity: a cross-sectional study’, BMC Public Health, 9, 286, 1–6.CrossRefGoogle ScholarPubMed
Mykyta, L. (2015) Housing Crisis and Family Well-Being: Examining the Effects of Foreclosure on Families, SEHSD Working Paper #2015-07, US Census Bureau, https://www.census.gov/content/dam/Census/library/working-papers/2015/demo/SEHSD-WP2015-07.pdf [accessed 26.06.2019].Google Scholar
Nelson, M. C., Lust, K., Story, M. and Ehlinger, E. (2008) ‘Credit card debt, stress and key health risk behaviors among college students’, American Journal of Health Promotion, 22, 6, 400–07.CrossRefGoogle ScholarPubMed
OECD (2017) Household Debt (Indicator), doi: 10.1787/f03b6469-en [accessed 22.06.2019].CrossRefGoogle Scholar
Pleasence, P., Balmer, N. J., Buck, A. and Patel, A. (2007) ‘Mounting problems: further evidence of the social, economic and health consequences of civil justice problems’, in Pleasence, P., Buck, A. and Balmer, N. J. (eds), Transforming Lives: Law and Social Process, Norwich: The Stationery Office, 67–92.Google Scholar
Poppe, C., Lavik, R. and Borgeraas, E. (2016) ‘The dangers of borrowing in the age of financialization’, Acta Sociologica, 56, 1, 19–33.CrossRefGoogle Scholar
Richardson, T., Elliott, P. and Roberts, R. (2013) ‘The relationship between personal unsecured debt and mental and physical health: a systematic review and meta-analysis’, Clinical Psychology Review, 33, 8, 1148–62.CrossRefGoogle ScholarPubMed
Rowlingson, K. and McKay, S. (2017) Financial Inclusion Annual Monitoring Report 2017, Birmingham: University of Birmingham.Google Scholar
Rueger, H., Weishaar, H., Ochsmann, E., Letzel, S. and Muenster, E. (2013) ‘Factors associated with self-assessed increase in tobacco consumption among over-indebted individuals in Germany: a cross-sectional study’, Substance Abuse Treatment Prevention and Policy, 8, 12, 1–8.CrossRefGoogle ScholarPubMed
Sherraden, M. and Gilbert, N. (1991) Assets and the Poor. New American Welfare Policy, New York: Routledge.Google Scholar
Sweet, E. (2018) ‘“Like you failed at life”: debt, health and neoliberal subjectivity’, Social Science and Medicine, 212, 86–93.CrossRefGoogle ScholarPubMed
Tanskanen, J. (2015) Parental Over-Indebtedness as a Predictor for Children’s Psychiatric Morbidity: A 13 Year Follow-up of the 1987 Birth Cohort, Master’s thesis, University of Helsinki, https://helda.helsinki.fi/bitstream/handle/10138/155266/Tanskanen_Sosiologia.pdf?sequence=2 [accessed 16.11.2017].Google Scholar
Turunen, E. and Hiilamo, H. (2014) ‘Health effects of indebtedness: a systematic review’, BMC Public Health, 14, 489, 1–8.CrossRefGoogle ScholarPubMed
van der Cruijsen, C., de Haan, J. and Jansen, D.-J. (2016) ‘Trust and financial crisis experiences’, Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 127, 2, 577–600.CrossRefGoogle Scholar
Weyerer, S. and Wiedenmann, A. (1995) ‘Economic factors and the rates of suicide in Germany between 1881 and 1989’, Psychological Reports, 76, 3, 1331–41.CrossRefGoogle ScholarPubMed