April 4, 2019

A study by Associate Professor Irene Ng from the NUS Department of Social Work and Director of the NUS Social Service Research Centre (SSR), Dr Ong Qiyan from SSR, and Associate Professor Walter Theseira from the SUSS School of Business was recently featured in The Straits Times. Titled ‘Reducing debt improves psychological functioning and changes decision-making in the poor’ and published in the Proceedings of The National Academy of Sciences last week (25 March), it sought to examine how chronic debt affects the poor.

Collaborating with Methodist Welfare Services (MWS), the researchers found that being chronically in debt hurts a low-income person’s ability to think clearly and make good decisions. Having multiple debts weighs heavily on a person’s mind, and especially so for the poor, who live from hand to mouth trying to pay bills and constantly struggle to keep from sinking deeper into debt. As a result, those who are low-income may be likely to turn down a training opportunity, avoid acquiring new skills, or not try new things.

Moreover, while much help is given to the poor, the aid schemes demand that they must exhaust their finances first or show proof that they are really in financial trouble before they can receive help. To this end, the researchers emphasise that it is more fruitful to extend aid to the poor at an earlier stage, so that they do not fall into chronic debt in the first place.

Read the full article here.