Debt Affects Cognitive Functions

Debt affect cognitive functions

Debt-free. It’s a dream to many and a reality to very few. So one may wonder — what does it FEEL like to have debt relief, since it’s not something brought up in many social conversations? Evidently, it doesn’t just take a burden off your checkbook. According to a new study done by researchers at the National University of Singapore’s Social Service Research Centre, it clears up cognitive functioning, lessens anxiety, and improves impulse control.

In the study, 200 low-income people unexpectedly had portions of their long-running mortgage, utility, and municipal debts paid down by a charity. The participants were tested before and after their windfalls on their ability to spot matches and mismatches. They were also tested for generalized anxiety disorder and their ability to make more beneficial financial decisions. According to the report, it was found that average error rates in the cognitive function tests fell to 4% after the debt was paid down, compared to a 17% error rate beforehand. It seems clearing debt frees up the mind to function better.

In addition, the proportion of participants showing generalized anxiety disorders went from 78% to 53% after the debt relief, and impulsive buying decisions dropped from 44% to 33%.

The university’s Dr. Ong Qiyan concluded, “Because debt impairs psychological functioning and decision-making, it would be extremely challenging for even the motivated and talented to escape poverty.” She added that the findings showed the costs of being poor that aren’t measured on a balance sheet. While the experiment played out on the other side of the globe and involved a very small number of people, the findings are still in line with previous research in the U.S. on the psychological toll of living in poverty.

When people live in “chronic scarcity” — meaning they lack sufficient money, housing and food to thrive — their brains become overtaxed, which evidently diminishes self-control and harms people’s ability make high-quality decisions.

Student loans are a big source of stress to many here in the U.S. As the nation faces $1.5 trillion in outstanding student debt, it affects everything from mental health to dating prospects since credit card debt is often a turn-off for potential mates. To lessen debt stress, it helps to consolidate debt to simplify the pay-off experience, researchers suggested.

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Source: TBWS