|
 “Our findings underscore that debt can be both positive and
negative, depending on what it is being used for and the price or
cost at which it is borrowed, in terms of interest rates, fees, and
the like,” said lead author Lawrence M. Berger of the Institute for
Research on Poverty at the University of Wisconsin-Madison.
“It makes sense that taking on debt for specific investments can be
beneficial – for example, taking on student loans to go to college
or a mortgage to buy a home may lead to better social and economic
outcomes, whereas taking on unsecured debt, such as credit card debt
or payday loans, that is not tied to such investments may not,”
Berger said by email.
The researchers looked at data from a national sample of
participants recruited as children beginning in 1979, and the
children of those subjects, who started to be included in 1986. The
whole cohort was followed through 2008 for the new study.
Researchers focused on 9,011 children and their mothers, who were
interviewed every two years about their child’s problem behaviors.
The study team also divided total parental debt into four
categories: home, education, auto and unsecured - including credit
cards, money owed to individuals or banks and medical debt.
Families with debt tended to be more educated, with higher academic
aptitude and self-esteem. Parents were also more often married and
owners of their own homes than those without debt, likely because
more advantaged people have greater access to credit and are more
likely to take on debt, the authors write in Pediatrics.
As overall debt increased, so did a child’s behavioral problems, but
this varied by type of debt. Higher levels of home mortgage and
education debt were tied to fewer behavioral problems, while
increases in unsecured debt were tied to more behavioral problems.
“What is not clear from our work is whether there are particular
thresholds, either in absolute terms or relative to income or
earnings at which we should particularly worry about the influence
of debt on child development,” Berger said.
“I think parents can be careful not to discuss financial hardship in
front of their children,” and not to have frequent fights in front
of children, said Patricia Drentea of the University of Alabama at
Birmingham, who was not part of the new study.
“These findings aren’t telling us that if you take out a mortgage
your children will be happier,” Dr. John Gathergood, an economist at
the University of Nottingham in the U.K., said by email.
[to top of second column] |
But something about the type of families that take out mortgage debt
compared with the type of families that take out expensive credit
cards or loans is important for a child’s wellbeing, Gathergood told
Reuters Health.
Collection efforts are more rigorous for unsecured debts, and may be
more stressful, said Heikki Hiilamo, a social policy researcher at
the University of Helsinki in Finland, who also was not part of the
new study.
But this is one of the first studies on the topic of parental debt
and child wellbeing, so it should be investigated further, he told
Reuters Health.
“It may be common to think about those struggling with (particularly
unsecured) debt as having made poor financial decisions or having
over-spent,” Berger said. “However, many of those with credit card
debt, medical debt, and payday loans took on such debt because they
lacked other financial alternatives.”
Wages have stagnated or decreased for several decades, particularly
at the low-end of the labor market, while credit has become more
readily available in large part due to financial deregulatory
policies, he said.
“Thus, many individuals and families are taking on debt to simply
stay afloat,” he said. “Although not addressed by our analyses,
financial counseling and education may be beneficial in the
short-term by helping individuals and families craft strategies for
reducing the cost of debt and repaying it as efficiently as possible
once taken on.”
SOURCE: bit.ly/1KtfIIX Pediatrics, online January 21, 2016.
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
