DEBT PROBLEMS AND CRIME*

Abstract

The few existing studies on the association between debt problems and crime have suggested that the two are correlated, but the causal nature and direction of this association has been unclear. By using longitudinal register data (N = 20,696) from Finland on young adults’ debt default and crime, we examine the potentially reciprocal association between debt problems and crime with both cross‐sectional and longitudinal models. Debt problems and crime have a strong association in the data, which persists after controlling for several measures of socioeconomic status. The longitudinal analyses using fixed‐effects regression models show that levels of crime are higher during periods of debt enforcement, ruling out stable between‐person heterogeneity as the sole cause. The final analysis examining the exact timing of new debt defaults and crime shows signs of a mutually reinforcing association; the rate of newly enforced debt increases in the months preceding the first crime leading to a conviction and continues to increase afterward mostly because of criminal monetary sanctions left unpaid. The conclusion of the analysis is that debt problems have a dynamic association with criminal offending. We discuss the difficult barrier that unpaid debts pose to offenders seeking to desist from criminal activity in the current Finnish context.