Skip to main content
SpringerLink
Log in

Effect of mortgage indebtedness on health of U.S. homeowners

  • Published:
Review of Economics of the Household Aims and scope Submit manuscript

Abstract

This paper examines the effect of excessive mortgage indebtedness on health among homeowners using nine waves of the Health and Retirement Study from 1992 to 2008. Health status is measured by subjective well-being, number of depressive symptoms, and incidence of hypertension. Using average annual state-level home prices as an instrument, we attempt to identify the causal effect in an panel IV framework. Results from the panel IV estimations suggest that having a high mortgage loan to home value (LTV), defined as LTV at or above 80 %, leads to more depressive symptoms and a higher incidence of hypertension, but has no effect on subjective well-being. Since the results from panel estimations did not show that debt affects health, whether the panel IV results demonstrate a causal relationship depends critically on the exclusion assumption.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. The cost of borrowing to purchase a home is subsidized by allowing interest paid on mortgages to be deducted from income and through government guarantees which reduce the credit risk of mortgage loans, essentially lowering the interest rate (Rosen 1985).

  2. The Survey of English Housing is a supplemental survey to the British Household Panel Survey (BHPS) consisting of households headed by younger individuals, single parents, single male parents, divorced and separated, divorced and inactive.

  3. See page 284 Wooldridge (2002).

  4. The participation rate of homeownership stabilizes at around 70 % after age 45 (Poterba and Samwick 2001).

  5. We follow Currie and Tekin (2011) who used cancer-related hospitalizations in a falsification test.

  6. See HRS Internet Survey Data Description document for more information about this survey. http://hrsonline.isr.umich.edu/modules/meta/2009/internet/desc/net09_dd.

  7. The RAND HRS Data file is a longitudinal data set based on the HRS data. It was developed at RAND with funding from the National Institute on Aging and the Social Security Administration (St Clair et al. 2011).

  8. The FMHPI data can be downloaded from http://www.freddiemac.com/finance/fmhpi/. Data is available at three levels of geographical aggregation: Metropolitan Statistical Area (MSA), state, and national. All series begin in January, 1975.

  9. The CPI data is available from ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.

  10. Unemployment data can be downloaded from http://www.bls.gov/lau/home.htm. Data is available at the county level of aggregation since 1990.

  11. See Stock et al. (2002).

References

  • Agarwal, S. (2007). The impact of homeowners’ housing wealth misestimation on consumption and saving decisions. Real Estate Economics, 35(2), 135–154.

    Article  Google Scholar 

  • Alley, D. E., Lloyd, J., Pagán, J. A., Pollack, C. E., Shardell, M., & Cannuscio, C. (2011). Mortgage delinquency and changes in access to health resources and depressive symptoms in a nationally representative cohort of americans older than 50 years. American Journal of Public Health, 101(12), 2293–2298.

    Article  Google Scholar 

  • Anderson, R., & Grossman, M. (2009). Health and the household. Review of Economics of the Household, 7(3), 219–226. doi:10.1007/s11150-009-9058-5.

    Article  Google Scholar 

  • Ásgeirsdóttir, T. L., Corman, H., Noonan, K., Ólafsdóttir, T., & Reichman, N. E. (2014). Was the economic crisis of 2008 good for icelanders? Impact on health behaviors. Economics & Human Biology, 13, 1–19. doi:10.1016/j.ehb.2013.03.005.

    Article  Google Scholar 

  • Averett, S. L., & Smith, J. K. (2012). Indebted and overweight: The link between weight and household debt. Institute for the Study of Labor (IZA) Discussion Papers No. 6898.

  • Benítez-Silva, H., Eren, S., Heiland, F., & Jiménez-Martín, S. (2010). Using the health and retirement study to analyze housing decisions, housing values, and housing prices. Cityscape, 12(2), 149–159.

  • Boone, J. L. (1991). Stress and hypertension. Primary Care, 18(3), 623–649. PMID: 1946791.

    Google Scholar 

  • Brown, S., Taylor, K., & Price, S. W. (2005). Debt and distress: Evaluating the psychological cost of credit. Journal of Economic Psychology, 26(5), 642–663.

    Article  Google Scholar 

  • Calcagni, E., & Elenkov, I. (2006). Stress system activity, innate and t helper cytokines, and susceptibility to immune-related diseases. Annals of the New York Academy of Sciences, 1069(1), 62–76.

    Article  Google Scholar 

  • Contrada, R. J., & Baum, A. (2009). The handbook of stress science: Biology, psychology, and health. Berlin: Springer.

    Google Scholar 

  • Currie, J., & Tekin, E. (2011). Is there a link between foreclosure and health? National Bureau of Economic Research (NBER) Working Paper No. 12171.

  • Dave, D. M., & Kelly, I. R. (2012). How does the business cycle affect eating habits? Social Science & Medicine, 74(2), 254262.

    Article  Google Scholar 

  • Dietz, R. D., & Haurin, D. R. (2003). The social and private micro-level consequences of homeownership. Journal of Urban Economics, 54(3), 401–450.

    Article  Google Scholar 

  • Dorian, B., & Taylor, C. B. (1984). Stress factors in the development of coronary artery disease. Journal of Occupational and Environmental Medicine, 26(10), 747–756.

  • Drentea, P. (2000). Age, debt and anxiety. Journal of Health and Social Behavior, 41(4), 437–450.

    Article  Google Scholar 

  • Drentea, P., & Lavrakas, P. J. (2000). Over the limit: The association among health, race and debt. Social Science and Medicine, 50(4), 517–529.

    Article  Google Scholar 

  • Franks, P., Gold, M. R., & Fiscella, K. (2003). Sociodemographics, self-rated health, and mortality in the US. Social Science & Medicine, 56(12), 2505–2514.

    Article  Google Scholar 

  • Glaeser, E. L., & Shapiro, J. M. (2003). The benefits of the home mortgage interest deduction, tax policy and the economy (Vol. 17). Cambridge: MIT Press.

    Google Scholar 

  • Gross, D. B., & Souleles, N. S. (2002). An empirical analysis of personal bankruptcy and delinquency. Review of Financial Studies, 15(1), 319–347.

    Article  Google Scholar 

  • Grossman, M. (1972a). The demand for health: A theoretical and empirical investigation. New York: Columbia University Press for the National Bureau of Economic Research.

    Google Scholar 

  • Grossman, M. (1972b). On the concept of health capital and the demand for health. Journal of Political Economy, 80(2), 223–255.

    Article  Google Scholar 

  • Himmelstein, D. U., Warren, E., Thorne, D., & Woolhandler, S. (2005). Illness and injury as contributors to bankruptcy. Health affairs (Project Hope) Suppl Web Exclusives:W5-63–W5-73. doi:10.1377/hlthaff.w5.63, PMID: 15689369.

  • Himmelstein, D. U., Thorne, D., Warren, E., & Woolhandler, S. (2009). Medical bankruptcy in the united states, 2007: Results of a national study. The American Journal of Medicine, 122(8), 741–746. doi:10.1016/j.amjmed.2009.04.012.

    Article  Google Scholar 

  • Idler, E. L., & Benyamini, Y. (1997). Self-rated health and mortality: A review of twenty-seven community studies. Journal of Health and Social Behavior, 38(3), 21–37.

  • Kario, K., McEwen, B. S., & Pickering, T. G. (2003). Disasters and the heart: A review of the effects of earthquake-induced stress on cardiovascular disease. Hypertension Research: Official Journal of the Japanese Society of Hypertension, 26(5), 355–367. PMID: 12887126.

    Article  Google Scholar 

  • Karlan, D., & Zinman, J. (2008). Lying about borrowing. Journal of the European Economic Association, 6(2–3), 510–521.

    Article  Google Scholar 

  • Keese, M., & Schmitz, H. (2013). Broke, ill, and obese: Is there an effect of household debt on health? Broke, ill, and obese. Review of Income and Wealth pp n/a-n/a. doi:10.1111/roiw.12002.

  • Keys, B. J., Mukherjee, T., Seru, A., & Vig, V. (2010). Did securitization lead to lax screening? Evidence from subprime loans. The Quarterly Journal of Economics, 125(1), 307–362.

    Article  Google Scholar 

  • Kiel, K. A., & Zabel, J. E. (1999). The accuracy of owner-provided house values: The 1978–1991 american housing survey. Real Estate Economics, 27(2), 263–298.

    Article  Google Scholar 

  • McGee, R. (1999). Does stress cause cancer? There’s no good evidence of a relation between stressful events and cancer. BMJ. British Medical Journal, 319(7216), 1015.

    Article  Google Scholar 

  • Mian, A., & Sufi, A. (2009). The consequences of mortgage credit expansion: Evidence from the u.s. mortgage default crisis. The Quarterly Journal of Economics, 124(4), 1449–1496.

    Article  Google Scholar 

  • Mustacchi, P. (1990). Stress and hypertension. The Western Journal of Medicine, 153(2), 180–185. PMID: 2219875.

    Google Scholar 

  • Neil Schneiderman, S. D., & Ironson, Gail. (2008). Stress and health: Psychological, behavioral, and biological determinants. Annual Review of Clinical Psychology, 1, 607–628.

    Article  Google Scholar 

  • Nettleton, S., & Burrows, R. (1998). Mortgage debt, insecure home ownership and health: An exploratory analysis. Sociology of health and illness, 20(5), 731–753.

    Article  Google Scholar 

  • Pollack, C. E., & Lynch, J. (2009). Health status of people undergoing foreclosure in the philadelphia region. American Journal of Public Health, 99(10), 1833–1839.

    Article  Google Scholar 

  • Pollack, C. E., von dem Knesebeck, O., & Siegrist, J. (2004). Housing and health in germany. Journal of Epidemiology and Community Health, 58(3), 216–222.

    Article  Google Scholar 

  • Poterba, J. M., & Samwick, A. (2001). Household Portfolio Allocation Over the Life Cycle. University of Chicago Press, pp. 65–104. Aging Issues in the United States and Japan.

  • Rosen, H. S. (1985). Housing subsidies: Effects on housing decisions, efficiency, and equity. Handbook of Public Economics, Chapter 7 (Vol. 1). New York: Elsevier.

  • St Clair, P., Bugliari, D., Chien, S., Hayden, O., Hurd, M., Miu, A., et al. (2011). RAND HRS data documentation, version l. Labor & Population Program, RAND Center for the Study of Aging.

  • Stock, J. H., Wright, J. H., & Yogo, M. (2002). A survey of weak instruments and weak identification in generalized method of moments. Journal of Business & Economic Statistics, 20(4), 518–529. doi:10.1198/073500102288618658.

    Article  Google Scholar 

  • Sweet, E., Nandi, A., Adam, E. K., & McDade, T. W. (2013). The high price of debt: Household financial debt and its impact on mental and physical health. Social Science & Medicine, 91, 94–100. doi:10.1016/j.socscimed.2013.05.009.

    Article  Google Scholar 

  • Taylor, M. P., Pevalin, D. J., & Todd, J. (2006). The psychological costs of unsustainable housing commitments. Institute for Social and Economic Research (ISER) Working Paper Series.

  • Wooldridge, J. (2002). Econometric analysis of cross section and panel data. Cambridge: MIT Press.

  • Xu, X. (2013). The business cycle and health behaviors. Social Science & Medicine, 77(1), 126–136.

  • Zimmerman, R. S., & Frohlich, E. D. (1990). Stress and hypertension. Journal of Hypertension Supplement: Official Journal of the International Society of Hypertension, 8(4), S103–107. PMID: 2258776.

    Google Scholar 

  • Zinman, J. (2009). Where is the missing credit card debt? Clues and implications. Review of Income and Wealth, 55(2), 249–265.

    Article  Google Scholar 

Download references

Acknowledgments

We thank our Editor Michael Grossman and two anonymous reviewers for helpful comments and suggestions. We also thank David A. Jaeger, Ted Joyce, Shailender Swaminathan, Amal Trivedi, and participants at the City University of New York Graduate Center Health Economics Seminar and Brown University Center for Gerontology and Health Care Research Brown Bag Presentation for constructive feedback. We are grateful to Purvi Sevak, Partha Deb, and Hunter College CUNY for facilitating our access to restricted HRS data. All errors are our own.

Author information

Authors and Affiliations

  1. Brown University, 121 South Main Street, Providence, RI, 02912, USA

    Leigh Ann Leung

  2. Carthage College, 2001 Alford Park Drive, Kenosha, WI, 53140, USA

    Catherine Lau

Authors
  1. Leigh Ann Leung
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Catherine Lau
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Leigh Ann Leung.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Leung, L.A., Lau, C. Effect of mortgage indebtedness on health of U.S. homeowners. Rev Econ Household 15, 239–264 (2017). https://doi.org/10.1007/s11150-014-9250-0

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11150-014-9250-0

Keywords

JEL Classification

Search

Navigation