Debt and Health - A Study of Incapacity Rate and Private Debt in Swedish Municipalties

Abstract: Household debt is rising throughout Sweden, and its health effects are poorly understood. This thesis attempts to establish a link between the average private indebtedness and the incapacity rate—a measure of average paid sick leave—within Swedish municipalities. We present a theoretical causal framework for the effect of debt on health, and review economic literature on the topic. The study finds a small statistically significant negative correlation between average household indebtedness and the incapacity rate, as measured by Försäkringskassan, and which stands opposed to the theory, under the assumption that incapacity rate accurately measures number of days spend sick.