PERC’s is launching its newest public interest report ‘Financial Melancholia – Mental Health and Indebtedness’ Wednesday July 8th with presentations by the authors of the report, Will Davies, Johnna Montgomerie & Sara Wallin and responses from Lynne Friedli (Hubbub), Sam Kirwan (University of Bristol), Kath Rock (Money Advice Trust)


Download Full report  Financial Melancholia (pdf)

 Kindle eBook version

ePub for nook, kobo, Sony and Tablet 



Mental health problems and personal indebtedness are two of the defining social problems of our age. But what is the relationship between the two? Debt can undoubtedly trigger depression and anxiety, but it is important that we also seek to understand the suffering that indebtedness can generate, and the specific feelings of guilt and inadequacy that a financialised society inculcates.

The rise of mental health problems such as depression cannot be understood in narrowly medical terms, but needs to be understood in its political economic context. An economy driven by debt (and prone to problem debt at the level of households) will have a predisposition towards rising rates of depression.

Quantitative evidence demonstrates the influence of inequality on rising levels of household debt and depression. There is also copious quantitative evidence indicating causal links between debt and mental health problems. However, the complexity of the inter-relations means that efforts to isolate causal mechanisms cannot succeed.

Our research looks beyond the statistics, to understand how individuals describe the experience of being deeply in debt, and the related health and social problems that this involves. It explores primary evidence from online peer-to-peer forums through which people with chronic debt problems share their experiences and offer support to each other.


Key Findings

People struggling with debt seek advice from their peers and demonstrate that they are responsible and willing to take necessary action; this runs contrary to policy narratives of the over-indebted as ‘in denial’ or lacking financial capabilities.

Financial Melancholia foregrounds the narratives of the indebted to interpret how being trapped by past debts through present-day repayment obligations manifests as psychological and sociological problems of indebtedness.

Indebtedness is visible as mental and physical illness at the individual level and emotional turmoil of chronic stress and anxiety at the household level; together, these foster an unhappy economy at the societal level.

Typically, the origin of problem debts is an external shock – from a minor mishap or single loan agreement to a job loss or illness in the family – which snowballs over time.

There is a clear link between a lack of social safety net and borrowing in times of personal/family crisis. This confirms existing empirical evidence and poses a direct challenge to policy narratives which seek to individualise debt as a personal problem.

There is a paradox regarding coping with debt: Individual efforts to take complete responsibility for it lead to manic, unrealistic dreams of escape (sometimes manifesting in further spending), whereas successful strategies involve seeking help and sympathy from others. Individualised perspectives on debt are part of the problem, not the solution.

These findings point to the much wider problem that widespread household indebtedness ties people to the past in ways which are not well understood. This is relevant because of the current policy context which seeks to promote positive psychology techniques to get people off benefits and into the labour market; we ask how living in a ‘depressed’ or ‘unhappy’ economy can be made visible when looking at everyday life. Contrary to popular belief, we find little evidence that indebted households are less responsible in their spending habits or management of their accumulated debts.

Our analysis of those living with debt and depression suggests that, unless policymakers learn to empathise with those struggling with entrenched financial and psychological problems, attempts at ‘behavioural activation’ (via approaches like cognitive behavioural therapy [CBT]) will fail. Depressed individuals already feel responsible for their own poverty and failure, but the government is only offering attempts to inculcate even greater personal responsibility.


Report authors

Dr Will Davies is Senior Lecturer in Politics, Goldsmiths, University of London and Co-Director of the Political Economy Research Centre. He is author of The Happiness Industry: How the government & big business sold us wellbeing (Verso, 2015) and The Limits of Neoliberalism: Authority, sovereignty & the logic of competition (Sage, 2014).
Tweets as:@davies_will

Dr Johnna Montgomerie , Lecturer in Economics, Political Economy Research Centre (PERC), Goldsmiths, University of London. She was lead author of ‘The Politics of Indebtedness: A Public Interest Report’ and her recent academic articles include “Round The Houses: Homeownership The failures of asset-‐based welfare in the UK” and “America’s Debt Safety-­‐net”
Tweets as: @j_montgomerie

Ms. Sara Wallin is a Research Associate at the Political Economy Research Centre (PERC), Goldsmiths, University of London. She is completing her ESRC doctoral thesis in the Department of Politics at the University of Sheffield, on gender and governance and her most recent article is “The EBRD’s Gender Action Plan and the Gendered Political Economy of Post-Communist Transition” in Globalizations and she will be special editor of British Politics upcoming issue ‘Uncovering the Hidden Costs of Recovery’.
Tweets as @S_Wallin

This report is funded as part of the ESRC Knowledge Exchange Opportunities grant (ES/M006433/1) ‘Crafting an Alternative Politics of Debt’