Jill Margo reports on new research suggesting that the health consequences of negative wealth shocks in people over 50 can be long-lasting and potentially fatal.
By Jill Margo*
In the event of “a negative wealth shock”, take care to safeguard your health.
New research suggests that in adults over 50, the sudden loss of wealth is associated with an increased risk of death over next two years.
The shock can lead to significant mental health problems and leave fewer monetary resources for health-related expenses, but the chronic stress can affect every organ system.
With limited years remaining to regain lost wealth, the health consequences of these negative wealth shocks may be long-lasting.
Overall, the research published in the journal of the American Medical Association (JAMA) found that wealth shock was linked to a 50 per cent greater risk of dying over the next 20 years.
It was an association, not proof of cause and effect.
The study involved almost 9,000 American adults who were aged between 51 and 61 at the beginning and were then followed for 20 years.
During this time, one in four experienced a negative wealth shock, defined as losing 75 per cent of their net asset value through events such as losing a home, a business, a job, or a pension.
About 7 per cent were left with long-term asset poverty.
The average loss was just over A$129,440.
Some losses occurred during the GFC.
Rich and poor alike
The link between financial instability and health existed in the rich and poor alike and a wealth shock affected them all.
This study adds to research linking these shocks to depression and anxiety, suicide, impaired cardiovascular function and substance abuse.
While previous studies have focused specifically on foreclosure as a particularly strong stressor, this study showed that shocks involving the loss of home had a stronger association with mortality than those where the home was saved.
The shock can lead to a spiral because there is less money to spend on healthcare, which can have long-term health consequences and compound the problem.
The psychological and social stresses of economic loss may contribute to mental health conditions and substance abuse.
Wealth shocks have been associated with short-term increases in blood pressure and inflammation, which in turn may increase the risk of cardiovascular mortality.
In an accompanying editorial, Dr Alan Garber of Harvard University said the findings suggested a wealth shock was just as dangerous as a fresh diagnosis of heart disease.
But the good news from the study authors, from NorthWestern University, Chicago, is that people with personality traits that enable greater tolerance of financial risk may buffer the stress of the shock.
* Jill Margo is Health Editor of The Australian Financial Review in Sydney. She tweets at @JillMargo1.
This article first appeared at www.afr.com.
