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Debt and Overindebtedness: Psychological Evidence and its Policy Implications
Author(s) -
Lea Stephen E. G.
Publication year - 2021
Publication title -
social issues and policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.798
H-Index - 35
eISSN - 1751-2409
pISSN - 1751-2395
DOI - 10.1111/sipr.12074
Subject(s) - debt , disadvantage , constraint (computer aided design) , economics , household debt , debt to gdp ratio , socioeconomic status , bad debt , internal debt , monetary economics , public economics , finance , sociology , political science , mechanical engineering , population , demography , law , engineering
This paper reviews psychological studies of real‐life use of credit, debt, and overindebtedness, with the aim of making policy recommendations that could reduce the damage done by debt to both individuals and society. The overall level of debt in society is heavily influenced by the level of economic inequality and social insecurity, and no psychological factor can prevent debt if excessive socioeconomic disadvantage is not addressed. Within that constraint, psychological precursors to debt problems, psychological impacts of debt, and psychological strategies to help people get out of debt can be identified. Research results in these areas are used to formulate a series of recommendations that could help mitigate debt problems.