“How do you pay for debt without money? Just pay with your health.” Understanding the association between Legal Financial Obligations and Physical Health

Abstract

Millions of people in the United States are subjected to Legal Financial Obligations (LFOs), otherwise known as the fees and fines imposed by the criminal justice system. This debt can be a source of stress for individuals because of their limited ability to pay it off. But how does this debt affect their physical well-being? Currently, little is known about how LFOs acting as stressors affect physical health and if relief is found when the debt has been paid. To explore this, I used the Survey of Household Economics and Decisionmaking to examine four questions: 1) are those with lower income more likely to have an LFO? 2) Do individuals with LFOs report poorer physical health than those without LFOs? 3) Does a change in LFO status affect an individual’s physical health? and 4) Does this effect change based on an individual’s income? In my analysis, I found that those with lower income have a higher probability of having an LFO. I also found that having an LFO is associated with reporting worse physical health, while individuals who never had an LFO or paid off an LFO report better physical health. When income was used as a moderator, there were no significant differences between groups. These findings help us understand the negative impact of LFOs on an individual’s health. We can see how LFOs act as a regressive tax where those with less income pay more and not having an LFO or paying off an LFO is better for your health than having one.