A 20-year study of more than 8,000 Americans showed that the sudden loss of wealth can have an adverse effect on a person. The research was published in the Journal of the American Medical Association, where the impact of “negative wealth shock” may cause a person’s death.
Effects of Wealth Shock
Negative wealth shock is defined as the loss of at least 75% of a person’s assets, including pension fund, business or home over a period of at most two years.
The study was conducted at the Feinberg School of Medicine of Northwestern University, IL and it showed that those affected by the sudden drop in wealth had a significant increase in risks of dying over the following 20 years.
The 8,714 respondents were between the ages of 51 and 61 from various parts of the United States. According to lead researcher Lindsay Pool, “A 50% increased risk of mortality over a 20-year period is a lot.” Pool is a research assistant professor of preventive medicine at Northwestern University, and a part of the research team. She and her colleagues collected data on the respondents every two years between 1994 and 2014.
The researchers were surprised that 2,430 of the subjects had experienced negative wealth shock. These were compared with those who never had much wealth. Both groups had almost the same level of mortality risk. The researchers also tried to rule out the possibility that existing health problems caused people to lose money in the first place, and these problems put them at risk of an early death.
After factoring this into the data, there was still a significant association between negative wealth shock and dying prematurely.
The findings showed that a person who suddenly lost wealth would have increased risk of premature death. The sudden financial loss could cause depression, increased instance of hypertension, and other stress-related conditions. Those who have lost their wealth would most probably also can no longer afford medical care including medications and doctor’s visits.
Effects Across Factors
The effect of negative wealth shock was more pronounced in women, and once this happened, they had the same level of risk of dying as the men. Other adjustments to the data were included to account for any bias due to marital changes, unemployment and health status and the connection between sudden loss of wealth and mortality persisted across the different models.
Related to the findings, the chances of dying were higher if the loss of a house was involved, or if the person had fewer assets.
Harvard University’s Dr. Alan Garber wrote an accompanying editorial and said that wealth shock can be as dangerous as a heart disease diagnosis. He also noted that doctors need to understand that money problems may affect patient’s health. The director of the Virginia Commonwealth Center on Society and Health Dr. Steven Woolf said that it is important to prevent people from experiencing negative wealth shock.
The dean of the Harris School of Public Policy at University of Chicago, Katherine Baicker said that there is need for more research to find out what to do about saving lives from wealth shock. Both Woolf and Baicker were not involved in the study.
This kind of data shows how sudden change or loss affects people negatively. And while further research and additional data are needed, it is a significant piece of information which could be useful in addressing mental health or psychological issues.
The impact of negative wealth shock cannot be undermined because it has no ready remedy, and it is one that heavily requires careful financial decisions.