Armando Reyes CAFF 321I Fall 2010

Effects of Financial Pressure on the Health of Individuals I. Introduction A. Statement of the Problem and Delineation of the Problem 1. Statement of the Problem Previous research has established a link between high levels of stress and poor health. Financial problems are often cited as a leading cause of stress among adults. However, very little attention is given to the possible link between ones financial health, and ones physical and mental health. Most Americans experience stress associated with late bill payments, overspending, and credit card debt at some point in their lives. However, for some individuals, financial distress is a chronic problem which makes them especially vulnerable to stressrelated illnesses including, headaches, nausea, irritable bowel syndrome, anxiety, low self-esteem, depression, and chest pains. If there is, indeed, a link between financial problems and physical symptoms, a vicious cycle emerges where financial stress causes illness, the illness results in medical bills, and the stress associated with medical debt causes further illness, starting the process again. In this way, societys financial issues and health issues feed on each other making it difficult to address either one. 2. Delineation of the Problem A recent study found that the percentage of people experiencing mental distress in New York City increased from 11.7% in 2007 to 23.8% in 2009, a growth that is attributed to financial pressure stemming from the global economic downturn. The research also shows that lower income individuals experience higher levels of depression during an economic downturn. Another study found that 42% of people who are in debt feel that their health has been affected by their financial problems. 48% of these people also report an improvement in their health after joining a debt management program that helps them improve their financial situation. B. Aspects of the Problem to be Discussed Aspect 1: Experiences of mental distress by individuals during an economic downturn: The story of an urban city. Aspect 2: Changes in health, negative financial events, and financial distress/financial well-being for debt management program clients. II. Development of the Problem/Review of Literature A. Aspect 1: Experiences of mental distress by individuals during an economic downturn: The story of an urban city. This article investigates the effects of the recent economic crisis on the mental health of New York City residents from diverse demographic backgrounds. Analysis of depression symptoms with data from studies done in 2007 before the economic crisis, and 2008 during the economic crisis, indicates that The Great Recession doubled the number of people who experience mental distress symptoms on a frequent basis. The article states that when the stories regarding the economic downturn began to appear in the media, many began to fear losing their homes and savings, and health insurance. The latter is especially important to this discussion because the research showed that a lack of health insurance was associated with the experience of frequent mental distress. The studys findings coincided with previous research indicating that low -income individuals are likely to have higher than average instances of mental distress. Researchers postulate that those who are of low income cannot afford mental health care and this contributes to their higher incidence of mental distress. B. Aspect 2: Changes in health, negative financial events, and financial distress/financial well-being for debt management program clients. This study explores the relationship between the financial well-being of individuals and their physical well being. Researchers assert that financial distress, and the various negative events associated with being in debt, contributes to various health disorders. The article states that 42% of debtors feel that their health has been affected by their financial situation. Debtors who did not receive any calls from creditors, make late payments, or experience other financially stressful events were found to have better health than those who experienced one or more of these events. Furthermore, 48% of debtors who completed a debt management program felt that their health had improved as their financial situation improved. The researchers theorize that stress stemming from financial issues initially results in emotional distress that eventually manifests itself through physical symptoms.

Armando Reyes CAFF 321I Fall 2010

III. Summary and Conclusions A. Summary Americans who constantly worry about their financial situation, namely debtors and the poor, are more likely to suffer from chronic stress due to the extra strain brought about by a weak financial position. Left untreated, stress can manifest itself through physical symptoms such as chest and back pain, irritable bowel syndrome, and depression. Due to their interconnectedness, the way in which American society chooses to address its financial problems and health problems will depend on scientific research that evaluates the link between the two. A recent study discovered that the recent economic downturn had the greatest effect on the mental health of low income individuals. Researchers observed that not having health insurance, or the prospect of losing their health insurance, increased the experience of mental distress symptoms among these low income subjects. In another study participants in a debt management program reported better health when they were not afflicted by financial stressors such as a late bill payment. Furthermore, about half of debtors who completed the debt management program experienced an improvement in their overall health. Most importantly, these studies confirmed that there is a link between economic pressures on the physical and mental health of financially distressed individuals. B. Synthesis and Conclusions For a long time, stress has been known to produce physical symptoms. The current rise in poverty, personal bankruptcy, and consumer debt will logically lead to increased stress levels among Americans who are apprehensive about their financial situation. As stress levels rise, physical symptoms of stress will increase, and so will the need for medical treatment. In this way, an individuals financial problems cross over and become health problems. In the case of low-income individuals, stress acts as a bridge connecting a persons financial worries to the physical symptoms of depression and anxiety. Furthermore, these low-income individuals may not have access to medical insurance so they do not seek medical assistance to remedy their mental distress. This may explain why lower income corresponds with a higher incidence of mental distress. In the case of debtors, negative financial events, such as a call from a creditor or a late payment are the most likely contributor to their stress. Calls from creditors are unexpected events that disrupt a persons daily activities and cause stress. Late payments are especially stressful because they have the potential to increase the amount of money the person owes resulting in more debt. Healthcare and the economy are some of the most talked about topics in Washington right now. Failure to acknowledge the connection between financial health and physical health can reduce the effectiveness of relief programs designed to aid those in distress. For example, it may be worthwhile to examine the financial consequences of healthcare reform. If health care reform in any way places an extra financial burden on individuals, the result may be higher than expected financial and social costs to the system. Conversely, it may also be worthwhile to examine the health aspects of financial reform. For example, bankruptcy legislation can include medical assistance in addition to financial education for those who need debt relief. C. Further Research The topic being studied is new therefore research is limited in scope and availability. The researchers concede that the current use of surveys and other self reported methods to assess mental and physical well-being has several limitations. Research that utilizes more sophisticated methods for measuring a persons well -being is needed to ensure that the effects of financial pressure are measured accurately. Furthermore, the effect of financial preoccupation on health needs to be assessed for other individuals beyond debtors and low-income urban individuals.

Effects of Financial Pressure on the Health of Individuals THROUGHPUT

INPUT
Demands Reduce debt levels Decrease negative financial events Reduce stress Increase financial literacy Increase income Resources Debt Management programs Financial legislation Counselors

PERSONAL SUBSYSTEM
Developing Subsystem Low income Poor purchasing behavior Poor financial literacy Poor knowledge of financial laws Values Subsystem Internal Locus of Control Perceived effectiveness of management Spend vs. Save

MANAGERIAL SUBSYSTEM
Planning Family meetings Spending rules Saving rules Establish new budget Implementing Planning large purchases Adhering to monthly budget Acting rationally in purchase situations Taking advantage of opportunities for increased income

OUTPUT
Demand Outcomes Easier time sleeping Increased self-esteem Reduced stress Better health Sense of control Resource Changes Money Energy

Level of Satisfaction Steady improvement

FEEDBACK

Multiple Choice Questions

1. Which of the following is true about stress? a. b. c. d. e. Health problems can cause stress Financial problems can cause stress Stress can cause physical health problems Stress can cause mental health problems All of the above

Answer: (e) 2. Which of the following is NOT a cause of stress among financially distressed individuals? a. b. c. d. e. Calls from creditors Lack of health insurance Criminal activity Late bill payments The economy

Answer: (c)

References ONeill, B., Prawitz, A., Sorhaindo, B., Jinhee, K., & Garman, E. (2006). Changes in health, negative financial events, and financial distress/financial well-being for debt management program clients. Financial Counseling & Planning, 17(2), 46-63. Retrieved from Academic Search Complete database. Cokes, C., & Kornblum, W. (2010). Experiences of mental distress by individuals during an economic downturn: The story of an urban city. Western Journal of Black Studies, 34(1), 24-35. Retrieved from Academic Search Complete database.