HHS Public Access Author manuscript Author Manuscript
J Health Psychol. Author manuscript; available in PMC 2017 September 26. Published in final edited form as: J Health Psychol. 2017 June ; 22(7): 864–873. doi:10.1177/1359105315617329.
The effect of the financial crisis on physical health: Perceived impact matters Brenda R Whitehead1 and Cindy S Bergeman2 1University
of Michigan–Dearborn, USA
2University
of Notre Dame, USA
Author Manuscript
Abstract The impact of the financial crisis on health was investigated (N = 312). Intraindividual intercept, slope, and quadratic parameters capturing trends in income, subjective financial situation, and perceived stress across the period predicted physical health, controlling for baseline health. For those experiencing a decline in financial situation, a decrease in financial situation and an increase in perceived stress predicted poorer health; neither financial situation nor perceived stress predicted health in those not experiencing this decline. Although we cannot intervene in contextual factors like the financial crisis, health outcomes may be improved by targeting perceived impact and stress levels in those who feel affected.
Author Manuscript
Keywords finances; financial crisis; health; income; stress The Global Financial Crisis (GFC), which began in late 2007 and continued through 2008, was primarily brought on by the bursting of the real-estate “bubble,” as rates of mortgages in default rose in 2006 and resulted in plummeting home values nationwide (Jones et al., 2008). The economy has been recovering steadily since 2009, with home values gradually rising and indicators of unemployment slowly improving. Here, we utilize a longitudinal dataset that provides a unique opportunity to explore the impact of the GFC in a sample of adults in mid- and later life, as data collection spanned spring of 2007 through spring of 2013. We are particularly interested in how subjective experience of stress and financial situation (FS) during the period of the GFC predicted physical health.
Author Manuscript
Although the state of the global economy at a given point in time does not vary across individuals, the extent to which such external circumstances influence health and well-being depends on a variety of factors. Bronfenbrenner depicted this reality well in his BioEcological Model (Bronfenbrenner, 1977; Bronfenbrenner and Ceci, 1994); within this framework, one’s experience is a function of the dynamic interaction between person and context. In Bronfenbrenner’s model, the recent economic recession is classified as part of
Reprints and permissions: sagepub.co.uk/journalsPermissions.nav Corresponding author: Brenda R Whitehead, Department of Behavioral Sciences, University of Michigan–Dearborn, Dearborn, MI 48128, USA. [email protected].
Whitehead and Bergeman
Page 2
Author Manuscript
the macrosystem, comprising the broad cultural, social, and economic conditions that set the stage for the more personal contextual factors; we expect the influence of this macro-level event on the individual—and specifically on the individual’s physical health—to depend on the subjective or perceived experience of the person, the innermost level of Bronfenbrenner’s model. The key person-level variables of interest here are perceived stress (PS) and subjective financial experience across the period of the GFC.
Economy and finances on health
Author Manuscript Author Manuscript Author Manuscript
Research shows consistent detrimental effects of economic downturns and financial strain on physical health. One study found that as rates of unemployment rose, physical health declined in a sample of middle-aged adults (Davalos and French, 2011); another identified employment security as a key factor in predicting physical health in a sample of employed adults, with those perceiving their employment to be less stable and secure reporting poorer self-rated health and more chronic disease diagnoses (Virtanen et al., 2002). A prospective study found that participants facing sustained economic hardship—defined by an income level well-below the federal poverty line—had significantly worse physical functioning a decade or more later compared to those not facing such hardship. These authors emphasized the directionality of this finding, stating that the results showed little support for the reverse effect, that reduced physical functioning led to economic hardship in this sample (Lynch et al., 1997). A more recent study conducted in India found a similar effect, where individuals living in lower-income neighborhoods—an indicator of sustained financial strain—were at higher risk for developing chronic health conditions than those living in higher-income neighborhoods (Kulkarni, 2013). Interestingly, some research suggests that objective indicators of physical health and mortality improve during periods of economic decline, perhaps due to healthier lifestyle behaviors (Gerdtham and Ruhm, 2006; Neumayer, 2004; Regidor et al., 2014). There is, however, some recent evidence to the contrary for the current cohort of older adults, as one study found that mortality in the elderly increased during periods of higher unemployment (McInerney and Mellor, 2012). In the context of economic concerns, extended financial strain, or perceptions that one’s financial resources are not sufficient for one’s needs, is most predictive of health problems in later life. Shorter periods of strain, although potentially damaging to health for a time, are less likely to have a longterm impact as long as the period of financial difficulty is followed by a time of lower stress (Kahn and Pearlin, 2006). The extended nature of the GFC accompanied by the unknown trajectory of recovery qualifies it as a potential source of chronic financial strain, making it likely to have impacted physical health in our sample. Because the degree to which objective economic conditions impact health in part depends on whether one considers him- or herself to be personally affected and experiences the accompanying strain in FS, we do not expect to observe these deleterious health effects across the board.
Stress on health PS, or the level of stress felt by an individual, has demonstrated a strong and consistent link with physical health in the literature. Higher levels of felt stress are associated with poorer short- and long-term physical health outcomes, including increased rates of cardiovascular disease (Richardson et al., 2012), reduced immune function (Godbout and Glaser, 2006),
J Health Psychol. Author manuscript; available in PMC 2017 September 26.
Whitehead and Bergeman
Page 3
Author Manuscript
increased risk of chronic health conditions in general (Kulkarni, 2013), and even greater overall mortality risk (Nielsen et al., 2008). These associations are generally believed to be a function of the intermediary physiological stress response that tends to accompany psychological stress (Merz et al., 2002). Specifically, the literature on allostatic load has demonstrated that a persistent physiological stress response—brought on by chronically high levels of PS—results in “wear and tear” on the body, gradually undermining cardiovascular, metabolic, and immune functioning and greatly raising the risk for the development of diseases such as diabetes, hypertension, and heart disease (Juster et al., 2010). Because financial and economic concerns are one of the most frequently cited sources of PS (American Psychological Association, 2011), and because these types of concerns are not typically resolved quickly and thus represent a source of chronic stress, we expect the links between economic/financial factors and health discussed above are actually due to the presence of heightened stress that results from chronic financial concerns. This stress in turn wears down the physiological systems, eventually leading to worse overall health. Such an effect has been supported in the literature; for example, one study found that higher levels of psychosocial stress mediated the link between neighborhood poverty and allostatic load (Schulz et al., 2012). In the context of aging, recent work found that the impact of physical health on self-rated successful aging is partially explained by levels of PS (Moore et al., 2015), demonstrating the potency of the stress response on health and well-being in older adults.
Author Manuscript
The present study
Author Manuscript
Here, we use five waves of longitudinal data spanning the period of the GFC to examine how the recent economic recession impacted health in our sample; we specifically consider intraindividual changes in PS and subjective FS across the period as predictors of health at the end of the period, controlling for intraindividual changes in income and health measured at baseline. Specific hypotheses for the overall sample are that higher baseline levels of PS and greater increases in stress across the period will predict worse health in Wave 5; that lower baseline levels of subjective FS and more substantial declines in FS across the period will predict worse health in Wave 5; and that when both factors are considered, the impact of PS will mediate (at least partially explain) the effect of FS on health. We further hypothesize that when these effects are examined separately for those who experienced a decline in subjective FS versus those who experienced an improvement, the above set of hypotheses will only hold in the decline group; for those in the improvement group, we expect to see the positive change in FS confer health benefits at the end of the period, and expect these effects to be unaffected by levels of stress (which is still expected to negatively impact health in this group).
Author Manuscript
Method Participants and procedure Participants were 312 adults aged 40 to 80 at Wave 1 (M = 53.3), representing a subsample of the larger Notre Dame Health and Well-Being study (NDHWB; N = 976), which is an ongoing longitudinal study exploring stress and well-being in the context of aging. In order
J Health Psychol. Author manuscript; available in PMC 2017 September 26.
Whitehead and Bergeman
Page 4
Author Manuscript
to arrive at the most representative sample possible, NDHWB participants are recruited from a list obtained from a social research firm, based on the annual Survey of Residential Households and census data. The primary component of the NDHWB is a yearly questionnaire packet, which participants fill out each year and return via mail in exchange for a US$20 gift card; here we use five waves of surveys spanning spring 2007 through spring 2013,1 in an attempt to capture patterns during the GFC. All participants gave informed consent to participate, and all procedures were approved by the University of Notre Dame Institutional Review Board.
Author Manuscript
In order to be included in the present analysis, participants had to have data on health at both Wave 1 and Wave 5; those who had data at both time points (N = 314) tended to be older (2year mean difference; p = .008), have a lower income (p = .006), and have slightly less education (p = .01) than those who did not. Two individuals did not report income, and were omitted from the analysis. Of the final 312-person sample, all participants had at least three waves of data; 90 percent of participants (N = 281) had data at all five time points, 6.5 percent (N = 20) had data at four time points, and 3.5 percent (N = 11) had data at three time points. The sample was 63 percent female, primarily Caucasian (85.5%; the next largest racial group was African Americans at 11.5%), and relatively well-educated (54% had some form of post-high school education, and only 3% did not graduate high-school). Participants were most likely to be married (50%), with divorced or separated (27%) next most common; 13 percent were widowed, and the remaining 10 percent reported being single. There was considerable diversity in income at Wave 1, with 5 percent earning US$75k per year.
Author Manuscript
Measures Income—In order to account for more objective information about FS in the analytic models, information about income was used as a control. At each wave, each participant reported his or her annual income as falling within one of seven income categories: 0) or negative (
J Health Psychol. Author manuscript; available in PMC 2017 September 26. Published in final edited form as: J Health Psychol. 2017 June ; 22(7): 864–873. doi:10.1177/1359105315617329.
The effect of the financial crisis on physical health: Perceived impact matters Brenda R Whitehead1 and Cindy S Bergeman2 1University
of Michigan–Dearborn, USA
2University
of Notre Dame, USA
Author Manuscript
Abstract The impact of the financial crisis on health was investigated (N = 312). Intraindividual intercept, slope, and quadratic parameters capturing trends in income, subjective financial situation, and perceived stress across the period predicted physical health, controlling for baseline health. For those experiencing a decline in financial situation, a decrease in financial situation and an increase in perceived stress predicted poorer health; neither financial situation nor perceived stress predicted health in those not experiencing this decline. Although we cannot intervene in contextual factors like the financial crisis, health outcomes may be improved by targeting perceived impact and stress levels in those who feel affected.
Author Manuscript
Keywords finances; financial crisis; health; income; stress The Global Financial Crisis (GFC), which began in late 2007 and continued through 2008, was primarily brought on by the bursting of the real-estate “bubble,” as rates of mortgages in default rose in 2006 and resulted in plummeting home values nationwide (Jones et al., 2008). The economy has been recovering steadily since 2009, with home values gradually rising and indicators of unemployment slowly improving. Here, we utilize a longitudinal dataset that provides a unique opportunity to explore the impact of the GFC in a sample of adults in mid- and later life, as data collection spanned spring of 2007 through spring of 2013. We are particularly interested in how subjective experience of stress and financial situation (FS) during the period of the GFC predicted physical health.
Author Manuscript
Although the state of the global economy at a given point in time does not vary across individuals, the extent to which such external circumstances influence health and well-being depends on a variety of factors. Bronfenbrenner depicted this reality well in his BioEcological Model (Bronfenbrenner, 1977; Bronfenbrenner and Ceci, 1994); within this framework, one’s experience is a function of the dynamic interaction between person and context. In Bronfenbrenner’s model, the recent economic recession is classified as part of
Reprints and permissions: sagepub.co.uk/journalsPermissions.nav Corresponding author: Brenda R Whitehead, Department of Behavioral Sciences, University of Michigan–Dearborn, Dearborn, MI 48128, USA. [email protected].
Whitehead and Bergeman
Page 2
Author Manuscript
the macrosystem, comprising the broad cultural, social, and economic conditions that set the stage for the more personal contextual factors; we expect the influence of this macro-level event on the individual—and specifically on the individual’s physical health—to depend on the subjective or perceived experience of the person, the innermost level of Bronfenbrenner’s model. The key person-level variables of interest here are perceived stress (PS) and subjective financial experience across the period of the GFC.
Economy and finances on health
Author Manuscript Author Manuscript Author Manuscript
Research shows consistent detrimental effects of economic downturns and financial strain on physical health. One study found that as rates of unemployment rose, physical health declined in a sample of middle-aged adults (Davalos and French, 2011); another identified employment security as a key factor in predicting physical health in a sample of employed adults, with those perceiving their employment to be less stable and secure reporting poorer self-rated health and more chronic disease diagnoses (Virtanen et al., 2002). A prospective study found that participants facing sustained economic hardship—defined by an income level well-below the federal poverty line—had significantly worse physical functioning a decade or more later compared to those not facing such hardship. These authors emphasized the directionality of this finding, stating that the results showed little support for the reverse effect, that reduced physical functioning led to economic hardship in this sample (Lynch et al., 1997). A more recent study conducted in India found a similar effect, where individuals living in lower-income neighborhoods—an indicator of sustained financial strain—were at higher risk for developing chronic health conditions than those living in higher-income neighborhoods (Kulkarni, 2013). Interestingly, some research suggests that objective indicators of physical health and mortality improve during periods of economic decline, perhaps due to healthier lifestyle behaviors (Gerdtham and Ruhm, 2006; Neumayer, 2004; Regidor et al., 2014). There is, however, some recent evidence to the contrary for the current cohort of older adults, as one study found that mortality in the elderly increased during periods of higher unemployment (McInerney and Mellor, 2012). In the context of economic concerns, extended financial strain, or perceptions that one’s financial resources are not sufficient for one’s needs, is most predictive of health problems in later life. Shorter periods of strain, although potentially damaging to health for a time, are less likely to have a longterm impact as long as the period of financial difficulty is followed by a time of lower stress (Kahn and Pearlin, 2006). The extended nature of the GFC accompanied by the unknown trajectory of recovery qualifies it as a potential source of chronic financial strain, making it likely to have impacted physical health in our sample. Because the degree to which objective economic conditions impact health in part depends on whether one considers him- or herself to be personally affected and experiences the accompanying strain in FS, we do not expect to observe these deleterious health effects across the board.
Stress on health PS, or the level of stress felt by an individual, has demonstrated a strong and consistent link with physical health in the literature. Higher levels of felt stress are associated with poorer short- and long-term physical health outcomes, including increased rates of cardiovascular disease (Richardson et al., 2012), reduced immune function (Godbout and Glaser, 2006),
J Health Psychol. Author manuscript; available in PMC 2017 September 26.
Whitehead and Bergeman
Page 3
Author Manuscript
increased risk of chronic health conditions in general (Kulkarni, 2013), and even greater overall mortality risk (Nielsen et al., 2008). These associations are generally believed to be a function of the intermediary physiological stress response that tends to accompany psychological stress (Merz et al., 2002). Specifically, the literature on allostatic load has demonstrated that a persistent physiological stress response—brought on by chronically high levels of PS—results in “wear and tear” on the body, gradually undermining cardiovascular, metabolic, and immune functioning and greatly raising the risk for the development of diseases such as diabetes, hypertension, and heart disease (Juster et al., 2010). Because financial and economic concerns are one of the most frequently cited sources of PS (American Psychological Association, 2011), and because these types of concerns are not typically resolved quickly and thus represent a source of chronic stress, we expect the links between economic/financial factors and health discussed above are actually due to the presence of heightened stress that results from chronic financial concerns. This stress in turn wears down the physiological systems, eventually leading to worse overall health. Such an effect has been supported in the literature; for example, one study found that higher levels of psychosocial stress mediated the link between neighborhood poverty and allostatic load (Schulz et al., 2012). In the context of aging, recent work found that the impact of physical health on self-rated successful aging is partially explained by levels of PS (Moore et al., 2015), demonstrating the potency of the stress response on health and well-being in older adults.
Author Manuscript
The present study
Author Manuscript
Here, we use five waves of longitudinal data spanning the period of the GFC to examine how the recent economic recession impacted health in our sample; we specifically consider intraindividual changes in PS and subjective FS across the period as predictors of health at the end of the period, controlling for intraindividual changes in income and health measured at baseline. Specific hypotheses for the overall sample are that higher baseline levels of PS and greater increases in stress across the period will predict worse health in Wave 5; that lower baseline levels of subjective FS and more substantial declines in FS across the period will predict worse health in Wave 5; and that when both factors are considered, the impact of PS will mediate (at least partially explain) the effect of FS on health. We further hypothesize that when these effects are examined separately for those who experienced a decline in subjective FS versus those who experienced an improvement, the above set of hypotheses will only hold in the decline group; for those in the improvement group, we expect to see the positive change in FS confer health benefits at the end of the period, and expect these effects to be unaffected by levels of stress (which is still expected to negatively impact health in this group).
Author Manuscript
Method Participants and procedure Participants were 312 adults aged 40 to 80 at Wave 1 (M = 53.3), representing a subsample of the larger Notre Dame Health and Well-Being study (NDHWB; N = 976), which is an ongoing longitudinal study exploring stress and well-being in the context of aging. In order
J Health Psychol. Author manuscript; available in PMC 2017 September 26.
Whitehead and Bergeman
Page 4
Author Manuscript
to arrive at the most representative sample possible, NDHWB participants are recruited from a list obtained from a social research firm, based on the annual Survey of Residential Households and census data. The primary component of the NDHWB is a yearly questionnaire packet, which participants fill out each year and return via mail in exchange for a US$20 gift card; here we use five waves of surveys spanning spring 2007 through spring 2013,1 in an attempt to capture patterns during the GFC. All participants gave informed consent to participate, and all procedures were approved by the University of Notre Dame Institutional Review Board.
Author Manuscript
In order to be included in the present analysis, participants had to have data on health at both Wave 1 and Wave 5; those who had data at both time points (N = 314) tended to be older (2year mean difference; p = .008), have a lower income (p = .006), and have slightly less education (p = .01) than those who did not. Two individuals did not report income, and were omitted from the analysis. Of the final 312-person sample, all participants had at least three waves of data; 90 percent of participants (N = 281) had data at all five time points, 6.5 percent (N = 20) had data at four time points, and 3.5 percent (N = 11) had data at three time points. The sample was 63 percent female, primarily Caucasian (85.5%; the next largest racial group was African Americans at 11.5%), and relatively well-educated (54% had some form of post-high school education, and only 3% did not graduate high-school). Participants were most likely to be married (50%), with divorced or separated (27%) next most common; 13 percent were widowed, and the remaining 10 percent reported being single. There was considerable diversity in income at Wave 1, with 5 percent earning US$75k per year.
Author Manuscript
Measures Income—In order to account for more objective information about FS in the analytic models, information about income was used as a control. At each wave, each participant reported his or her annual income as falling within one of seven income categories: 0) or negative (
