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Chapter 7 identifies a conundrum of the EITC: It is intended to lift low-income individuals out of poverty, yet the credit is subject to capture by a number of creditors and agencies. Because it is delivered as a tax refund, the amount due to the taxpayer can be offset against outstanding federal and state tax liabilities, past-due child support, and federal student loan liabilities. The possibility of such offset betrays its function as an antipoverty supplement. Low-income families are subject to various economic stressors and are likely to have outstanding debts. In reconfiguring the credit into two distinct elements – an incentive to work and an antipoverty supplement – Congress might consider whether the latter should be protected from offset or garnishment (in whole or in part) in order to better serve its purpose. This chapter considers the pros and cons of such a protection, and proposes some possible structures.
This essay argues that the art student who decides not to be an artist exposes the essential lack in many working artists today: this is the lack of fun, which is necessary for successful art and which—ironically—the artist might find once they leave their craft. Responding to Arjun Appadurai’s essay, “The Ready-Made Pleasures of Déjà Vu: Repeat Viewing of Bollywood Films,” I use Appadurai’s “repeat viewer” to focalize the art student as a figure who is both the repeat viewer and the artist who creates the work of art that solicits repeat viewing to begin with. The art student embodies in his or her own self the transition from the artist to the viewer, allowing for a productive reciprocity whereby the artist performs the role of the viewer and vice versa. I close my essay by reflecting on the art student as a possibility for rethinking India’s political dilemma that concludes Appadurai’s essay.
‘1989’ and the dismantling of communist rule was less the beginning of the region’s globalisation than a confirmation of a choice about the form of globalisation that the region would take. Alternative, non-Western-centric forms of global integration were abandoned and neoliberal economics became dominant. Yet this was not a Western imposition: local elites in many bloc countries, responding to shifts in an increasingly financialised and debt-ridden global economy, began a gradual process of realignment long before 1989. In re-imagining the region’s economic future, elites looked as much to East Asia or Latin America as they did to the West. Some considered an authoritarian Communist-led neoliberal globalization which was eventually defeated in 1989. These shifts in part explain why the neoliberal transformation in Eastern Europe after 1989 occurred at such speed.
Constitutional scholars emphasize the importance of an enduring, stable constitutional order, which North and Weingast (1989) argue is consistent with credible commitments to sustainable fiscal policies. However, this view is controversial and has received little empirical study. We use 19th-century US state-level data to estimate relationships between constitutional design and the likelihood of a government default. Results indicate that more entrenched and less specific constitutions are associated with a lower likelihood of default.
Scholarship on Matt 5.25–6 has focused on the question of whether the saying offers mundane wisdom or threatens divine judgement, with the majority concluding that it refers to eternal punishment in hell. This article examines debt-prison and related phenomena before turning to the illuminating history of ancient interpretation. The article concludes that the ‘eternal damnation’ gloss widely favoured today is an overinterpretation first inspired by the exigencies of fourth- and fifth-century doctrinal controversy. Instead of eternal perdition, Matt 5.25–6 and its parallels suggest a time of straits followed by possible release.
This essay partakes in the dialogue between history, anthropology, and social theory on the topic of debt as a social relation. Drawing on sources from nineteenth-century Switzerland, it examines everyday routines of debt collection in liberalism by taking the seized collateral object to the center of historical analysis. It is shown how the attached goods in a debtor's household became an object of knowledge for nineteenth-century framers of law as well as for ordinary debtors. I make use of anthropological theory in order to describe the legal techniques of delineating and extracting collateral, and show how these legal techniques implied specific knowledge practices. I then look at two borderline cases of collateralization: the pawning of mobile goods and the imprisonment of insolvent debtors. Further, I discuss how, by the 1880s, the limits of debt collection were debated, when certain goods were exempt for seizure in a projected federal law. Overall, on an epistemological level, debt collection appears as a double movement: it provided basic tools to untangle property relationships, yet all the while it created new, unpredictable complications. Thus debt collection was a distinctive arena in which the uneasy conceptual relationship between people and things in nineteenth-century liberalism unfolded. From this conceptual node I propose a historical epistemology of the collateral object.
Job loss, debt and financial difficulties are associated with increased risk of mental illness and suicide in the general population. Interventions targeting people in debt or unemployed might help reduce these effects.
We searched MEDLINE, Embase, The Cochrane Library, Web of Science, and PsycINFO (January 2016) for randomized controlled trials (RCTs) of interventions to reduce the effects of unemployment and debt on mental health in general population samples. We assessed papers for inclusion, extracted data and assessed risk of bias.
Eleven RCTs (n = 5303 participants) met the inclusion criteria. All recruited participants were unemployed. Five RCTs assessed ‘job-club’ interventions, two cognitive behaviour therapy (CBT) and a single RCT assessed each of emotional competency training, expressive writing, guided imagery and debt advice. All studies were at high risk of bias. ‘Job club’ interventions led to improvements in levels of depression up to 2 years post-intervention; effects were strongest among those at increased risk of depression (improvements of up to 0.2–0.3 s.d. in depression scores). There was mixed evidence for effectiveness of group CBT on symptoms of depression. An RCT of debt advice found no effect but had poor uptake. Single trials of three other interventions showed no evidence of benefit.
‘Job-club’ interventions may be effective in reducing depressive symptoms in unemployed people, particularly those at high risk of depression. Evidence for CBT-type interventions is mixed; further trials are needed. However the studies are old and at high risk of bias. Future intervention studies should follow CONSORT guidelines and address issues of poor uptake.
The Portuguese were keen slave traders on the west central coast of Africa in the early modern period, but governors in Angola appear to have been increasingly unhappy about certain aspects of enslavement in relation to debt, and in particular that of children. Slavery for debt was uncommon in early modern Europe, where three arguments, drawn from Roman law, were usually cited by way of justification: birth; war; and self-sale. Cavazzi, an Italian Capuchin missionary travelling around Angola between 1654 and 1665, suggested several similarities between the legal justifications for slavery in Africa and Europe, but also pointed up a major difference: while in Angola in the early modern period enslavement could result from a number of instances of default, in Portugal at the same time - and in Europe more widely – debtors tended to find themselves imprisoned if they defaulted on a payment, rather than enslaved. This paper will consider the nature of debt enslavement in Angola in the early modern period, and how it impacted on the transatlantic slave trade.
Was there really a debt-fuelled ‘liberal growth model’ that preceded the 2008 financial crisis? The accepted narrative about the pre-crisis boom is that some liberal countries relied on domestic consumption to fuel economic growth, and on household debt to fuel this consumption. In this, they contrasted with coordinated economies. While eventually unsustainable, the growth strategy was politically necessary to maintain middle-class living standards in the context of increasing income inequality. In this article, I take these contentions to the data. Economic evidence from 1995–2007 and political data from the Comparative Manifesto Project Database undermine this received wisdom: while household debt increased in the liberal countries, it does not differentiate this particular growth model. Further, there is no evidence that politicians in liberal countries advocate different economic policies, including those concerning borrowing, to claim credit and stay in power. Differences in the importance of finance between countries, however, suggest a more elite-driven divergence.
To contribute to a retirement plan (barring an increase in income), an individual must either reduce consumption or increase debt. Using data from the 2004 wave of the Survey of Income and Program Participation, we examine the extent to which contributing to 401(k)-type accounts leads to an increase in short-term financial difficulties, particularly among low-income individuals. After instrumenting for plan take-up, we find that contributing to a 401(k) plan appears to have a small positive impact on the presence of any material hardship and debt holding among the lowest income quintiles, though that effect diminishes further up the income distribution.
Despite increasing interest in household assets and debts, little is known about the way these are distributed and controlled within couples. Our understanding of these issues is important in social policy not least because some areas of policy (e.g. social security means-tests) assume that all couples, whether married/civil partnered or not, share assets equally, whereas other areas of policy, such as the law around intestacy or separation/divorce, make very different assumptions about married/civil partnered couples compared with cohabiting couples. But is there a difference between these couples or not? And are the assumptions made about each type of couple accurate? Our research suggests that the division of assets within couples is complex with formal, legal ownership of assets (housing, pensions, savings) and debts not always matching participants’ ‘perceptions’ of who owns them. And while there does seem to be a difference between cohabiting and married couples, there is also variation within these couples as other factors also influence the division of assets.
Within the context of the 2007 financial crisis and the (ongoing) financial crisis for many households and consumers, this review article explores the key debates in the social policy literature surrounding household accumulation of assets and debts. The first section contextualises emerging debates surrounding inequalities, financial exclusion and the need for greater financial citizenship within the post financial crisis era. The second section of the article considers household assets and debts, whilst the third section explores housing wealth and mortgage arrears. The fourth section examines recent research on how households manage their money. The final section of the article concludes by exploring the potential pathways for social policy research in relation to broader debates within the social sciences on household finances, assets and debts.
The previous administration introduced several measures to prevent mortgage possessions, some of which were modestly effective. However, these hastily introduced initiatives were insufficient to bridge the gap between a fragmented policy framework and borrowers’ circumstances and experiences of managing mortgage debt. The present restructuring of welfare and regulation represents a unique window to address these long-standing policy omissions in relation to sustainable homeownership in the UK. However, in the context of weakening state support, it is uncertain how or indeed whether, the opportunity to reform mortgage safety nets will be grasped. This article reflects upon the continuing misalignment of policy with borrowers’ circumstances and experiences of mortgage arrears using new evidence from this downturn.
This article reflects on research undertaken with low income households over a 12 month period following the ‘credit crunch’, a period characterised by rapid change to the financial landscape in the UK. It argues that people living on persistent low incomes were casualties of the economic ‘boom’ as they did not benefit from economic growth and of the ‘bust’ in that they most keenly felt the impact of the recession and the reaction of financial institutions to the new financial landscape. It concludes by arguing that, reflecting on the complexity of people's lives, addressing indebtedness requires a multi-faceted approach.
How does the internal organization of a foreign aid donor affect its aid allocation decisions? Despite the voluminous literature on the political economy of foreign aid, little systematic scholarship exists on this topic. This paper analyzes the allocations of the International Development Association (IDA), the World Bank's lending arm for the poorest countries, to all eligible countries between 1977 and 2005. While factors such as a country's need and its policy environment have consistently impacted IDA's allocation decisions, other factors have changed in important ways. For example, IDA disbursements do not follow US aid disbursements in the post–Cold War period the way they did during the Cold War. And most strikingly, IDA's allocations have become tightly linked to debt owed to IDA's sister organization, the International Bank for Reconstruction and Development (IBRD). While IDA used to shy away from countries with higher debt to the IBRD, the last two decades have seen IDA engage in apparently defensive lending for the IBRD, lending more to countries with outstanding balances to that institution. The results suggest greater focus on the internal structures of donors would yield insight into their allocation decisions.
Personal debt is one of many factors associated with anxiety, depression and suicidality. The aim of this study was to examine the relationship between personal debt and suicidal ideation in the context of sociodemographic factors, employment and income, lifestyle behaviours, and recently experienced traumatic events.
Interviews were conducted with a random probability sample comprising 7461 respondents for the third national survey of psychiatric morbidity of adults in England. Fieldwork was carried out throughout 2007. The prevalence of suicidal thoughts in the past week, past year and lifetime was assessed and current sources of debt were recorded.
In 2007, 4.3% of adults in England had thought about taking their own life in the past 12 months, ranging from 1.8% of men aged ⩾55 years to 7.0% of women aged 35–54 years. Those in debt were twice as likely to think about suicide after controlling for sociodemographic, economic, social and lifestyle factors. Difficulty in making hire purchase or mail order repayments and paying off credit card debt, in addition to housing-related debt (rent and mortgage arrears), was strongly associated with suicidal thoughts. Feelings of hopelessness partially mediated the relationship between debt and suicidal ideation.
The number of debts, source of the debt and reasons for debt are key correlates of suicidal ideation. Individuals experiencing difficulties in repaying their debts because they are unemployed or have had a relationship breakdown or have heavy caring responsibilities may require psychiatric evaluation in addition to debt counselling.
Economic recessions are characterized by job insecurity and rising unemployment. The relationship between job insecurity and poor mental health is known. However, we do not know how this relationship is affected by individual socio-economic circumstances.
A random probability sample comprising 3581 respondents (1746 men and 1835 women) were selected from the third national survey of psychiatric morbidity in Great Britain. Fieldwork was carried out throughout 2007. Depression was assessed using the revised Clinical Interview Schedule and ICD-10 research diagnostic criteria administered by well-trained lay interviewers.
One-fifth of all working men and women aged 16–64 years felt that their job security was poor. From a multivariate analysis of several job stressors, there was an increased likelihood of depression among those agreeing that their job security was poor [odds ratio (OR) 1.58, 95% confidence intervals (CI) 1.22–2.06, p<0.001]. After controlling for age and sex, job insecurity (OR 1.86, 95% CI 1.47–2.35, p<0.001) and being in debt (OR 2.17, 95% CI 1.58–2.98, p<0.001) were independently associated with depression.
Job insecurity has a strong association with feelings of depression even after controlling for biographic characteristics (age and sex), economic factors (personal debt) and work characteristics (type of work and level of responsibility). Despite the organizational changes needed to cope with a recession, employers should also take note of the additional distress experienced by workers at a time of great uncertainty, particularly those in less skilled jobs and in financial straits.
The association between poor mental health and poverty is well known but its mechanism is not fully understood. This study tests the hypothesis that the association between low income and mental disorder is mediated by debt and its attendant financial hardship.
The study is a cross-sectional nationally representative survey of private households in England, Scotland and Wales, which assessed 8580 participants aged 16–74 years living in general households. Psychosis, neurosis, alcohol abuse and drug abuse were identified by the Clinical Interview Schedule – Revised, the Schedule for Assessment in Neuropsychiatry (SCAN), the Alcohol Use Disorder Identification Test (AUDIT) and other measures. Detailed questions were asked about income, debt and financial hardship.
Those with low income were more likely to have mental disorder [odds ratio (OR) 2.09, 95% confidence interval (CI) 1.68–2.59] but this relationship was attenuated after adjustment for debt (OR 1.58, 95% CI 1.25–1.97) and vanished when other sociodemographic variables were also controlled (OR 1.07, 95% CI 0.77–1.48). Of those with mental disorder, 23% were in debt (compared with 8% of those without disorder), and 10% had had a utility disconnected (compared with 3%). The more debts people had, the more likely they were to have some form of mental disorder, even after adjustment for income and other sociodemographic variables. People with six or more separate debts had a six-fold increase in mental disorder after adjustment for income (OR 6.0, 95% CI 3.5–10.3).
Both low income and debt are associated with mental illness, but the effect of income appears to be mediated largely by debt.
This paper analyzes optimal paths in a one-sector growth model when the technology is not convex. In such a case, we prove that optimal paths converge to the upper steady state iff the initial wealth is above a critical level. Then, we first show that, thanks to debt and/or R&D, the poverty trap may be avoided. Second, we introduce a distortion: corruption that mostly has dramatic consequences on growth, but may have a beneficial effect if it is not high and if it improves productivity (incentive effect).