Elsevier

Social Science & Medicine

Volume 50, Issue 4, February 2000, Pages 517-529
Social Science & Medicine

Over the limit: the association among health, race and debt

https://doi.org/10.1016/S0277-9536(99)00298-1Get rights and content

Abstract

This research responds to the call for more research on the conceptualization and measurement of socio-economic status that moves beyond merely considering education, occupation and income variables. Credit card usage and credit card debt is a growing phenomenon in developed countries. Using data from a 1997 representative sample of more than 900 adults in Ohio, we explored how credit card debt and stress regarding debt is associated with health. We found that both credit card debt and stress regarding debt are associated with health. In addition, health behaviors and risks explain part of this association.

Introduction

This paper responds to the call for more research on the conceptualization and measurement of socio-economic status that moves beyond merely measuring education, occupation and income variables (Williams, 1990, Adler et al., 1994, Anderson and Armstead, 195, Oliver and Shapiro, 1995, Williams and Collins, 1995, Hummer, 1996). Traditional measures of socio-economic status including education, income and occupation have been recently criticized for underestimating wealth and the differences between the financial well-being among subgroups of the population (Adler et al., 1994, Anderson and Armstead, 195, Oliver and Shapiro, 1995, Williams and Collins, 1995, Hummer, 1996). In this paper, we test whether financial debt, as another aspect of socio-economic status and financial well-being, is associated with health. Specifically, we examine whether credit card debt and stress regarding overall debt is related to health. We then assess to what extent is the race difference in health between blacks and whites explained by differences in debt and stress regarding debt.

Previous research finds that socio-economic status is strongly associated with health and mortality (Kitagawa and Hauser, 1973, Townsend et al., 1988, Mirowsky and Ross, 1989, Smith et al., 1990, Williams, 1990, Feinstein, 1993, Ross and Wu, 1995, Williams and Collins, 1995, Elo and Preston, 1996, Lantz et al., 1998;). However, by not including other dimensions of financial well-being, researchers greatly underestimate deeply-embedded inequality (Oliver and Shapiro, 1995). In general, we know little about other measures that tap into well-being such as economic hardship, debt, assets and wealth (but see Ross and Huber, 1985, Anderson and Armstead, 195). One example of research on wealth is the case of middle-class blacks in the United States. Middle-class blacks earn 70 cents for every dollar earned by middle-class whites — but they possess only 15 cents for every dollar of wealth held by middle-class whites. Thus, other measures of financial status may help us understand inequality and its health consequences (Oliver and Shapiro, 1995).

To our knowledge, no one has studied the association of credit card debt and stress regarding debt with health; yet credit card debt is growing in the United States (Edelberg, 1997, Yoo, 1997) as well as in the European markets (Wallace, 1998). The lack of research in the area is partially due to a lack of data on individual credit card debt and other financial well-being measures, but also due to the narrow conceptualization of socio-economic status as education, income and occupation.

Credit card debt is another way of tapping into one's financial well-being because at times people use credit cards as a way of purchasing goods and services they could otherwise not afford (Schor, 1998). Credit card debt may be a more sensitive barometer of financial well-being than income because it may tap into more long-term deprivation. Families often use credit during difficult financial times, so that while income is measured at one time point, credit card debt has likely accumulated over time (Williams and Collins, 1995).

Credit card debt is an increasing problem among Americans in the United States (Edelberg, 1997, Yoo, 1997); and the explosion of credit cards has been documented in Europe and especially in England as well (Wallace, 1998). Credit card debt is part of the mounting problem of increased consumption in the last half-century in modern society. This phenomenon, called ‘the new consumerism’ by Juliet Schor, shows Americans are aspiring to have more, although they have not been earning proportionally more. Therefore, while in the past Americans used to match their life style with others in their local reference group, such as their neighbors, they now choose reference groups of people whose incomes are three, four or five times their own salary. Schor (1998) argues this ‘relentless ratcheting up of standards’ has caused many to incur massive debt and stress.

Credit card debt is also associated with an increase in bankruptcy cases in the United States (Cocheo, 1997, Schor, 1998). Credit card debt is unlike debt acquired from the purchase of home and cars for two reasons. First, almost all credit card debt is unsecured debt — meaning that there is no collateral secured against the debt. This may lead to more aggressive collection tactics described later in this paper. Second, credit card debt is nonnormative as compared to ‘normative debt’ such as a home mortgage. While debt incurred from a home and car are deemed necessities in US society, credit card debt is frequently viewed as ‘excessive’ debt taken on by those with prodigal habits. While in reality those in severe credit card debt are often those who have experienced a recent job loss and/or health problems (Cocheo, 1997), the social view on these people is that they are spending more than they earn, and that this is shameful. Alternatively, normative debt, such as purchasing a home is associated with stability, responsibility and being a tax-paying member of a community. For both of these reasons, we believe credit card debt is especially stressful and may lead to health problems.

We argue credit card debt can impact health for several reasons. (1) Credit card debt can be associated with both short-term and long-term financial difficulties. Having a lot of credit card debt may be indicative of a financial crisis — such as one who experiences job loss, and has no income or savings. In such cases, families may charge basic necessities (from food, medicine, clothing and shelter to school tuition) on their credit cards. Since credit card debt accumulates over time, and interest is generally high, it is also indicative of extended financial hardship. (2) High debt may lead individuals to not spend as much on ‘quality’ goods and services associated with their own health. If individuals are having trouble paying for their needs, they may cut corners in terms of health care. For instance, one may buy inexpensive mass-produced magnifying glasses or walking canes rather than prescription reading glasses and custom-fitted canes. People may buy less expensive food as well, such as canned fruits and vegetables, rather than fresh produce. (3) Finally, the stress of owing money, and knowledge that one is paying high interest rates, may lead to increased stress resulting in worsening health. Collection agencies are known to harass those who have defaulted on their debt using such tactics as threatening letters, calling at home or work and so on. While consumer interest groups, as well as the Fair Debt Collection Practices Act in the US have tried to limit harassment by collection agencies, the illegal tactics to collect from those in default do still occur. In addition, unfair collection tactics are more likely to happen among disadvantaged groups who are less likely to know and exercise their rights (Dietz and Langer, 1996, Gray, 1997). All of these reasons may cause additional stress.

It is well established that in contemporary American society blacks, as a group, have worse health on average and have a lower life expectancy than do whites as a group (Williams, 1990, Rogers, 1992, Williams and Collins, 1995, Hummer, 1996, Schoenbaum and Waidmann, 1997). For instance, blacks are more likely to have hypertension, diabetes, cancer, arthritis, mental disorders, disabling conditions and activity limitations (Mutchler and Burr, 1991, Schoenbaum and Waidmann, 1997). In addition, they are more likely to be overweight, which is associated with chronic health problems and mortality (Dortch, 1997). These race differences show some signs of increasing rather than decreasing since 1960 (Williams and Collins, 1995).

One possible reason for these race differences may be the difference in wealth and financial well-being among blacks and whites. The disparity in debt may provide evidence as to why blacks have higher rates of disease and disability. Furthermore, understanding more about the race gap in health and life expectancy may aid in closing it. Wealth of the black middle-class is tenuous, residing mostly in income, a house and cars (Oliver and Shapiro, 1995, Williams and Collins, 1995). Blacks rarely have additional income-producing resources to draw upon should they lose their job or suffer another financial crisis. This translates into 65% of middle-class whites in the United States being able to maintain their present standard of living for a month if their income stopped, but only 27% of blacks could do the same (Oliver and Shapiro, 1995, p. 97). Thus, it is possible that blacks carry proportionally more debt, and that this may explain part of the relationship between race and health.

One of the ways socio-economic status affects health is through health risks and health behaviors (Berkman and Breslow, 1983, US Department of Health and Humans Services, 1990, Adler et al., 1994, Patterson et al., 1994). In the case of debt, it is plausible that financial hardship and stress as indicated by incurring credit card debt, paying high interest rates, and so on may be associated with nonhealthy behaviors such as excessive drinking, smoking or being overweight (Berkman and Breslow, 1983, US Department of Health and Humans Services, 1990, Adler et al., 1994; Patterson et al., 1994).

In sum, building on existing literature explaining the importance of socio-economic indicators of well-being (Ross and Huber, 1985, Mirowsky and Ross, 1989, US Department of Health and Humans Services, 1990, Williams, 1990, Anderson and Armstead, 195), we explore how credit card debt and debt stress are associated with physical health. Specifically, we will compare the health of blacks to health of whites in the United States using income, several indicators of credit card debt, and the stress one experiences surrounding debt.

We investigate the following hypotheses:

  • H1: credit card debt and stress regarding debt will be inversely associated with health.

  • H2: credit card debt may have a stronger effect than income on the dependent variables.

  • H3: part of the effect of credit card debt and stress regarding debt on health will be explained by health risks and behaviors.

  • H4: credit card debt and stress regarding debt will explain part of the relationship between race and health.

  • H5: the effect of having credit card debt or stress regarding debt on health may be stronger for blacks than whites.

Section snippets

Methodology

This study is based on two random-digit dialing telephone surveys of adult Ohioans conducted in June, 1997; one survey was statewide and the other sampled zipcodes within the state with a high concentration of black residents. Each survey used a questionnaire that contained a number of economic variables (including many indicators of household debt), several types of personal health variables, and a host of demographic and background variables. The questionnaire took approximately 20 min, on

Review of descriptive statistics

Table 1 shows that blacks, as a group, are consistently less well-off than whites across a host of health and other social measures. In terms of health, blacks have higher levels of impairment, lower self-reported health, are more likely to be overweight, and more likely to smoke cigarettes than do whites. Blacks also are much less likely to be married. They have more children, have attained less education, have lower household incomes, and experience more stress due to the overall debt they

Acknowledgements

This research was supported in part by a 1998 Summer Survey Research Fellowship awarded to Patricia Drentea from the Center for Survey Research, College of Social and Behavioral Sciences at The Ohio State University. Funding for data collection, which was gathered as part of the monthly Buckeye State Poll was provided by the College and by the Columbus Dispatch and WBNS-TV. We thank our Ohio State University colleagues, Lucia Dunn of the Department of Economics and Catherine Ross of the

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