Over-indebtedness and age: The effects on individual health

Abstract

This paper uses longitudinal data from the Spanish Survey of Household Finances to investigate the relation between household situations of over-indebtedness and self-assessed health by age. The interest of the Spanish case relies on the increased indebtedness of Spanish families after the 2008 Global Crisis. The paper differentiates between mortgage and non-mortgage debts and between young and middle-aged and old individuals. We rely on Deb and Trivedi's (2006) method to account for the endogeneity of self-assessed health and over-indebtedness simultaneously. The paper shows that being over-indebted in mortgage debts is associated with lower self-assessed health among middle-aged and old individuals. However, among young individuals, this detrimental health effect only appears when the situation of over-indebtedness is due to both mortgage and non-mortgage debts.