Debt and mental illness
Mind published a good report today, as part of Mental Health Week, on the link between debt and mental illness. The link is definitely there - the Office for National Statistics found that people with experience of mental distress are three times more likely to be in debt than those without such experience.
Mind undertook a survey of mentally ill people for the report. They found that such people, on average, owed £3,250 on credit or store cards, and 70% of respondents had been unable to pay a bill. One in four mentally ill people, they suggested, had debt problems.
The issue has not been addressed so far, Mind suggest, because people in banking have little awareness of how to deal with mental health questions, while people working in mental health have little awareness of financial issues. So it's a prime example of the new joining of psychology and economics, which I've been calling psychoeconomics.
The problem with classical economics is, it assumes individuals are good rational calculators of their economic interest. But we're not. We're highly irrational creatures, swayed by our animal spirits. We are driven by insecurity, fear, greed, excessive positivity, excessive despair. These emotional drives can often translate into serious debt problems.
I think of a friend of mine from school, who like the Great Gatsby always dreamed of joining the leisure class. He mortgaged his apartment, and blew the entire mortgage in a hedonistic month where he took cabs everywhere, stayed in hotels, snorted coke, and for a few weeks fooled himself he was one of the idle rich. No doubt he had many 'mates' during that riotous month. Then he got another mortgage, to carry on living the dream and chasing that illusion of status and acceptance. Then he killed himself on heroin.
I saw a lady at the Mind drop-in centre where I volunteer, complaining about her 'fuc*ing bank', because it wouldn't refund her for what she called credit card fraud. She'd had a manic episode, and when she came out of it, she'd apparently spent over £1,000. 'But I couldn't have spent that, it must be fraud', she said. 'You should complain about it' said a lady who worked at Mind. But is it really impossible that the person spent all that money? She's not in control of herself. She doesn't know what she's doing.
I seriously wonder if people with serious mental health problems should be allowed to have credit cards. I don't think they should, because they can't be held responsible for their actions. But banks seem happy to lend to anyone, the more unstable and out of control the better.
I'm no Islamist, but I do think Islamic banking has better practices in this area, with its controls on interest lending. Otherwise banks have an incentive to keep on lending more and more to individuals who are out of control, to profit from their misery.
You can read the Mind report here.