LAWRENCE – We often hear about things that can harm our health, but the lists rarely include financial information. New research from the University of Kansas has found that financial capability may actually be a social determinant of health, and those who have it are more likely to have positive health outcomes.
According to the study, financial capability, or the combination of financial literacy and financial access, can predict health outcomes when considered separately from the commonly studied socioeconomic factors of income, education, occupation, race and gender. The results indicate that it is important to view both financial literacy (or ability to act) and financial access (opportunity to act) in financially positive ways. .
Financial capability research has traditionally focused on individual financial knowledge and skills, and when exploring the links between health and finances, it has most often focused on the aforementioned socioeconomic factors. Sicong “Summer” Sun, assistant professor of social welfare at KU, conducted a study to examine the link between financial capability and health and well-being using a nationally representative survey . The results can help improve understanding of the structural factors of financial capability and its effect on health and well-being.
“Marginalized people have always been excluded from mainstream financial services. All individuals and households should have accessible and affordable means to deposit, save, invest and access the affordable credit and insurance products they need. My argument is that improving people’s financial capability is achievable, practical, and changeable in ways that advance racial, social, economic, and health equity in society,” Sun said.
The study, written with co-author Yu-Chih Chen of the University of Hong Kong, was published in the Journal of Family and Economic Issues. The authors analyzed data from the 2012 National Financial Capability Study, in conjunction with the US Financial Crisis Effects Survey of 2012 and 2016. The nationally representative samples of more than 3,800 Americans measured financial capability by rating people’s levels of financial literacy, access and education. Access was determined by whether people had checking and savings accounts, pension plans, and credit cards. Literacy was determined by whether people were good at math, good at everyday financial questions, and self-rated financial knowledge, as well as how many of six financial literacy questions they answered correctly.
Health was measured by five indicators: satisfaction with life, self-rated health status, levels of depression, feelings of exhaustion and overall happiness. Respondents answered the questions in 2012 and again four years later. The results showed that people who had higher financial capability also had better health outcomes. The data also showed that respondents who were male, had a college degree, were married, employed, and insured had higher levels of financial capability, and that Blacks, Hispanics, and people from other racial groups had higher levels of financial capability. lower levels of financial ability than non-Hispanics. white attendees.
The researchers write that to their knowledge, the study is the first to theoretically and empirically examine the link between financial capability and health. And the results show the connection between the two, confirming the need for further research in the field and its importance in health finance and policy.
“By focusing on both individual skills and knowledge and structural access, we examined the historical drivers of the unequal distribution of financial access and resources. We also discussed the theoretical framework of how financial capability can be viewed as a fundamental determinant of upstream health. says Sun. “I think we need to look at financial capability on a broader scale, both at the structural and individual level. In a related study, I found that financial access plays a more pronounced role in shaping stability well-being, versus financial literacy. In other words, capabilities and opportunities matter, but structural opportunities matter more.”
In addition to providing empirical evidence of the link between financial capability and health outcomes, the study opens the door to further research on community-wide structural links between financial measures and outcomes. in health, Sun said. It also suggests the value of social work and public health practitioners and policy makers integrating financial and health services.
“For example, the services could provide financial coaching, credit counseling, financial resources, and counseling in clinical settings,” the authors wrote. “Financial assessments could be incorporated alongside health and psychological assessments into social service protocols, given the fundamental role of financial capability in shaping people’s physical and psychological health outcomes.”
Finally, the study shows that policies designed to improve financial inclusion are also important for population health. Financial capability depends on both individual knowledge and skills and the availability of financial policies, products and services. Ensuring these services are available to all communities can help address long-standing inequalities in wealth and health.
“We need to focus on structural access and not just the skills or knowledge a person might have,” Sun said. “And it is important that researchers continue to collect data in this area. I see financial capability as a universal need, not just to improve people’s financial well-being, but to improve population health and well-being.
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