Who’s hurt most by debt? Life course adversity and the debt gap in midlife health

Background: Does the association between indebtedness and midlife health, that is, the debt gap in health, vary systematically by individuals' propensity for becoming indebted? To answer this question, we investigated potential heterogeneity in the debt-health association and tested competing hypotheses derived from cumulative inequality and relative deprivation. Methods: With data from the National Longitudinal Survey of Youth 1979 (NLSY79), we measured indebtedness as self-reported negative net worth. Midlife health was assessed using SF-12 mental and physical health scores at age 50. The analysis estimated Average Treatment Effects (ATEs) to test the overall association between debt and midlife health. We then applied matching-smoothing (MS) and stratification-multilevel (SM) estimators to assess heterogeneity in the debt gap in midlife health. Results: Indebtedness was associated with significantly poorer midlife mental and physical health. Both MS and SM estimators found evidence that the debt-health association varied systematically across the propensity for indebtedness, with the largest debt gap in health concentrated among those with the highest likelihood of experiencing indebtedness. Contribution: These findings provide empirical support for cumulative inequality theory, suggesting that the debt gap in midlife health widens significantly as chronic adversity increases. Findings highlight the importance of policies assisting financially vulnerable adults across the life course.