Central bank interest rate decisions, household indebtedness, and psychiatric morbidity and distress: evidence from the UK

Christopher J. Boyce, Liam Delaney, Eamonn Ferguson, Alex M. Wood

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)


Background: Central banks set economy-wide interest rates to meet exclusively economic objectives. There is a strong link between indebtedness and psychiatric morbidity at the individual level, with interest rates being an important factor determining ability to repay debt. However, no prior research has explored whether central bank interest rate changes directly influence mental health, nor whether this varies by levels of indebtedness. 

Methods: We use British data (N = 93,255) to explore whether the Bank of England base-rate affected how perceived burden of non-mortgage debt (low, medium, and high) influenced psychiatric morbidity. Psychiatric morbidity was measured using the General Health Questionnaire (GHQ-12). Our primary outcome measure was a binary indicator of “psychiatric caseness” (>3 on a 0–12 scale). We also used the GHQ-12 as a continuous measure of distress. 

Results: When interest rates are high (low) there is an increased (decreased) risk of psychiatric morbidity only among those with a high debt burden (b = 0.026, p = 0.02). This result was robust to alternative explanations. Thus a 1 percentage point base-rate increase is associated with a 2.6% increase that someone with a high debt burden will experience psychiatric morbidity. 

Limitations: Our study uses subjective indicators of debt burden. We were unable to determine the mechanism behind our effect. 

Conclusions: Changes in central bank interest rates to meet economic objectives pose a threat to mental health. Mental health support is needed for those in debt and central banks may need to consider how their decisions influence population mental health.

Original languageEnglish
Pages (from-to)311-317
Number of pages7
JournalJournal of Affective Disorders
Issue numberJuly
Publication statusPublished - Jul 2018
Externally publishedYes


  • Indebtedness
  • Mental health
  • Monetary policy
  • Policy making
  • Psychiatric morbidity


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