Volunteers are needed to write future research briefs on a personal finance topic of their choice. The briefs should include a complete reference citation, a brief summary of the research study, and implications for practitioners. Interested in research around a particular topic? Please contact Erica Tobe, Ph.D. at tobee@msu. edu and suggest topics for the next set of research briefs. 

This quarter’s Research Briefs focus on recent trends in household debt and their effect on members of households. To reflect AFCPE’s commitment to help make research more easily understood, here are three research articles that provide an overview of consumer debt in the U.S., how that debt affects household members, and implications when working with clientele.

“Consumer Debt Stress, Changes in Household Debt, and the Great Recession” by L.F. Dunn and I.A. Mirzaie (Economic Inquiry, 2016)

Data from the Consumer Finance Monthly survey (CFM) from 2006 through 2012 was used to examine how holding different types of debt (collateralized and uncollateralized) changed during the Great Recession and the impact of this on psychological stress as it is tied directly to debt. The study found that consumers using payday loans and student loans increased between 2008 and 2011, while credit cards, loans from family and friends, bank loans, installment loans, HELOCs, and mortgage loans decreased during the same time. Even though the number of individuals having credit card debt decreased, the total amount of
debt increased by 18 percent for those holding debt. Debt stress in the population increased by 55 percent from its 2006 level, reaching a record high in 2009. Women and hispanics were found to have higher debt stress and the impact of a collection agency encounter on the measured stress of women is about 47 percent greater than that of comparable men.

“Household Debt and Adult Depressive Symptoms in the United States” by L.M. Berger, J.M. Collins, and L. Cuesta (Journal of Family Economic Issues, 2016)

This study used data from Waves 1 (1987–1989) and Waves 2 (1992–1994) of the National Survey of Families and Households (http://www.ssc.wisc.edu/nsfh/) in the U.S. to estimate the association between types and levels of debt and adult depressive symptoms. The results suggest that short-term or unsecured debt is associated with increased depressive symptoms, whereas longer-term debt does not.

“Parental Debt and Children’s Socio-emotional Well-being” by L.M. Berger, J.N. Houle (Pediatrics, 2016)

This study used population-based longitudinal data from the National Longitudinal Study of Youth 1979 (http://www.bls.gov/nls/) Cohort and their children who were observed annually or biennially from 1986 to 2008. The Behavioral Problems Index was used to measure socioemotional well-being. The researchers found that greater total debt was associated with poorer child socioemotional well-being. However, the association varied by type of debt. Higher levels of home mortgage and education debt (investment debt) were associated with greater socioemotional well-being for children, whereas higher levels of and increases in unsecured debt were associated with lower levels and declines in child socioemotional well-being.

These studies illustrate the effects of consumer debt on the U.S. population. The biggest trend and takeaway for practitioners is that the type of debt a household has will affect members differently. Families with more unsecured debt rather than investment-type debt (mortgage, education loans, etc.) tend to be associated with more adverse outcomes on family members and thus should be addressed in a different manner. The possibility of referral to a mental health professional should be considered.


Carrie L. Johnson, Ph.D., AFC®, is an Extension Specialist in Family Resource Management and an Assistant Professor with the Department of Consumer Sciences at South Dakota State University. She can be reached at carrie.johnson@sdstate.edu and on Twitter at @SDSUExtFinance.

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