Young people's payment problems:
Advantaged Norwegian parents foot the bill

Researchers have examined registry data for young Norwegians born between 1995 and 1997. Registry data is information about the entire population, not just a sample of certain groups.

The researchers looked for correlations between parents' socioeconomic background and young people’s mental health problems and payment difficulties – and they found them.

“Children whose socioeconomic conditions were poorer are more likely to end up in financial difficulties,” says Åsmund Hermansen.

Hermansen, along with researchers Aapo Hiilamo and Maria Reinholdt Jensen, has discovered that the socioeconomic background of Norwegian parents can reinforce the correlation between mental health problems and payment difficulties.

“If your parents have a low income and low levels of education, this will increase the probability of you ending up experiencing payment difficulties,” says Aapo Hiilamo.

What do parents have to do with this?

“The fact that parents are a factor when it comes to the probability of young people experiencing payment difficulties isn't really all that surprising,” says Hermansen.

Norwegian parents with resources help their children out. They simply cover the bills if problems arise.

“Knowledge of how to manage finances is also passed down,” he says.

Parents with good finances ensure that their children learn to manage their own finances to a greater extent than parents with fewer resources. 

Make less rational choices

“People whose finances are tight also show a clear tendency to make less rational choices due to stress,” says Maria Reinholdt Jensen.

Debt can quickly become a self-reinforcing process where easily accessible loans are taken out to manage other debt.

Young people with mental health problems often receive better help if their parents are advantaged.

“These young adults often also receive better treatment for mental health problems, as their parents can cover the costs,” says  Hiilamo.

“If you hail from a poorer background, the risk of developing mental health problems also increases,” says Jensen. 

The link between mental health problems and payment difficulties is already well known in research.

“The socioeconomic background of parents can influence the correlation between mental health problems and payment difficulties,” says Jensen.

Advantaged parents can both support young people struggling with mental health problems and help them manage their payment difficulties. 

More men experience payment difficulties

“We see this in many other countries too, but more young men experience payment difficulties,” says Hiilamo.

Hiilamo cannot say for certain why men are more likely to experience payment difficulties, but he believes that a greater willingness to take risks may be a factor. 

Problems must persist long enough to get help 

For those who do not have advantaged parents, help can be difficult to access. Hermansen does not believe it is easy for young people with financial difficulties to get help from the public sector.

“Those who are struggling with significant and extensive financial difficulties can apply for a debt settlement,” he says. 

However, in order for this to be granted by the Enforcement Office, the individual must apply, and if the conditions are met, debt negotiations can begin. This can be a long and difficult process.

“Your life will be in ruins before you get into a debt settlement agreement,” he says.

You must be ‘persistently unable’ to pay your debt to be granted a debt settlement.

“In the meantime, advantaged parents simply swipe their card and solve the situation for their children,” says Hermansen. 

Borrowing money is too easy

“We don't have data on young people before the advent of the internet, but it's clear that today’s society facilitates impulsivity,” says Hermansen.

The researchers believe it is too easy for young people to borrow money today. 

“It's become normal to borrow money to buy something you really want. Not because you need it. And that's problematic,” says Jensen.

They note that it was previously harder to take on unsecured debt.

Jensen points out that it is relatively easy nowadays to borrow NOK 5,000 (about 470 USD), which can quickly lead to more serious payment problems if you need to take out additional loans just to repay the initial amount plus interest. 

Reference:

Hiilamo et al. 'Associations between adolescent psychiatric disorders and adulthood payment problems: a Norwegian register study of complete birth cohorts of 1995–1997', Journal of Epidemiology & Community Health, 2025. DOI: 10.1136/jech-2024-222915 (Abstract)

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Read the Norwegian version of this article on forskning.no

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