Financial Stress and Its Physical Effects On Individuals and Communities
Financial Stress and Its Physical Effects On Individuals and Communities
Financial Stress and Its Physical Effects On Individuals and Communities
E
verywhere you look, the symptoms of the current recession are clear: homes lost
to foreclosure, job losses across almost every sector of the economy, dwindling
retirement portfolios, and frozen credit markets. But the recession has also led to
a number of other symptoms that havent been getting enough attention: head-
aches, backaches, ulcers, increased blood pressure, depression and anxiety, just to name
a few. Extended periods of stress can take their toll on physical, mental, and emotional
health, compounding the difficulties that many low- and moderate-income communities
face during troubled economic times. As we think about ways to strengthen health and
community development finance at the institutional level, we need to remember the impact
that financial instability can have on health outcomes at the individual level.
1 Federal Reserve statistical release, Flow of Funds Accounts of the United States, Second Quarter 2009.
2 AP-AOL poll, conducted March, 24 April 3, 2008. See http://surveys.ap.org/ for full results.
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to be negatively impacted, says Paul J. Lavrakas, a research psychologist who analyzed the
results of the survey.3 Lavrakas and his colleagues from the Ohio State University developed
the Debt Stress Index to track the impact of worry about financial debt on health and well-
being. The index hit a record high in July 2009 and has only slowly decreased with the first
signs of economic recovery. Among the people reporting high debt stress in the AP poll, 27
percent had ulcers or digestive-tract problems, compared with eight percent of those with
low levels of debt stress, and 29 percent who suffered severe anxiety, compared with four
percent of those with low debt stress.
We cant conclude from these findings that financial stress is the lone culprit in poor
health outcomes, but medical research suggests that these types of symptoms are represen-
tative of chronic stress. The body reacts to stress with a fight-or-flight response, releasing
adrenaline and cortisol, major hormones associated with stress. In situations of persistent
stress, the body adapts to adverse conditions by establishing a new state of equilibrium,
and the elevated levels of these chemicals can cause significant physical harm to vital bodily
systems such as blood pressure, heart rate, memory, mood, and immune functioning.
On a more intuitive level, money is more than just cash and coins. Just ask anyone whos
suffered a layoff, witnessed their retirement savings vanish, or watched helplessly as the
value of their house plummetedmoney provides feelings of security, power, indepen-
dence, and freedom. And the threat of ongoing debt or insufficient income can result in feel-
ings of loss of control, anxiety, and other mental and emotional distress. In addition, chronic
financial stress has been linked to a cycle of increased workplace absenteeism, diminished
workplace performance, and depression.4
3 Associated Press. (June 9, 2008). Debt Stress Causing Health Problems, Poll Finds. Retrieved from http://
www.msnbc.msn.com/id/25060719/.
4 R. L. Weisman, Personal Financial Stress, Depression, and Workplace Performance, in Financial Stress and
Workplace Performance: Developing Employer-Credit Union Partnerships, The Center for Credit Union
Innovation and Filene Research Institute, Madison, Wisconsin, 2002.
5 Brody, Leslie. (2009, September 20). Recessions toll on children: Parents arent the only ones who suffer when
jobs are lost and money is tight. Chicago Tribune.
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years.6 The study finds that young people from poor families are particularly vulnerable to
becoming trapped in the self-perpetuating cycle of adverse life circumstances and poor
health. K. A. S. Wickrama, one of the authors of the study, concluded, What needs to be
done is enhance the kids' resiliency factorssuch as investing in kids education and psycho-
logical competency programs. The policies and intervention programs need to focus on early
intervention . . . because early levels of depression have a persistent influence.7
Laura Choi is a research associate in the Community Development department of the Federal Reserve
Bank of San Francisco, where she serves as editor of the quarterly publication Community Investments
and researches a variety of issues aimed at improving economic opportunities for low- and moderate-
income communities. She received a BA in economics and a master of public policy degree, both from
UC Berkeley.
6 Iowa State University News Service. (2008). ISU study finds early family depression has lasting effects on
teens, young adults. Retrieved from http://www.public.iastate.edu/~nscentral/news/2008/dec/depression.
shtml.
7 Ibid.