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Debt Affects How Your Mind Works, Says Scientists


Being perpetually in debt can kind of mess you up. Who knew?

Do you have debt? Have you ever tried taking out a loan? If you’re like 34% of Americans, you probably took out a personal loan last year.

According to a study published in Proceedings of the National Academy of Sciences, debt can greatly affect one’s mental state. You might already know the feeling if you’ve ever experienced having to take out loan after loan just to be able to pay your bills and live a normal life. As it turns out, there’s actually a science behind this phenomenon.

The researchers from the National University of Singapore and the Singapore University of Social Sciences studied a total of 196 “chronically indebted” individuals who were beneficiaries of the Getting Out of Debt (GOOD) program by Methodist Welfare Services, a charity in Singapore.

It turns out that when people are in debt, they tend to view each individual debt as a separate “mental account” that can psychologically cause them pain. Thinking about these accounts also uses up much-needed mental resources and the psychological impact may even prevent indebted people from choosing the right decisions that can get them out of poverty, which simply continues the poverty cycle.

“Reducing the number of debt accounts lowers the mental burden of the poor, thereby improving psychological and cognitive performance,” the study suggests. “Poverty interventions should be structured to improve psychological and cognitive functioning in addition to addressing the financial needs of the poor.”

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