Odds Ratios for Impact of Medical
Debt on Home Equity
Question: Information on people with and without medical debt and people with and without home equity is presented in the contingency table below. Use this data to calculate the odds ratio for the existence of medical debt on negative home equity.
Follow up to Calculation of Odds Ratio Calculation: The respondent level data obtainable from the 2018 Financial Capability Survey can be used to estimate a logistical regression model of the impact of medical debt on negative house equity. What is the odds ratio obtained from this logistical regression model where the dependent variable is a dummy variable set to 1 if the respondent has negative home equity and the explanatory variable is a dummy variable set to 1 if the respondent has medical debt?
Follow up discussion of impact of medical debt on negative house equity: What do the results presented here indicate about the impact of medical debt on negative house equity?
Contingency Table for Medical Debt
and Home Equity
 
Positive House Equity

Negative House Equity

Total
 
No Medical Debt

13,175

456

13,631

Medical Debt

2,105

772

2,877

Total

15,280

1,228

16,508

Sample of all homeowners in 2018 track of the national capability study.
The odds ratio calculation from the contingency table:
Step One: Calculate the probability of having medical conditional on negative house equity and the probability of have medical debt conditional on positive house equity.
P(medical debt/negative house equity) = 772/1228 = 0.629.
P(medical debt/positive house equity) = 2105/15280 = 0.138.
Step Two: Calculated the odd for the two conditional ratios above.
O_{1}= 0.629/(10.629) = 1.6929
O_{2}= 0.138/(10.13) = 0.1597.
Step Three: Calculate the odds ratio by taking the ratio of the two odds, which is 1.6929/0.1597 or 10.6.
Follow up to Calculation of Odds Ratio Calculation:
I used survey questions to generate dummy variables for existence of negative house equity and existence of medical debt. The analysis is limited to homeowners on the 2018 survey.
The code used to estimate the logistical regression model is presented below.
logistic underwater medical_debt if track==2018 & home_owner==1
The results are presented below.
underwater

Odds Ratio

Std. Err.

z

P>z

[95% Conf.

Interval]

medical_debt

10.59622

.6734463

37.14

0.000

9.35519

12.00188

_cons

.034611

.0016486

70.61

0.000

.031526

.0379979

Note the odds ratio from the logistical regression model is 10.6 same as from the contingency table.
What is the impact of medical debt on negative equity?
Medical debt has a huge impact on negative equity. It is likely that people with medical bills are taking out home equity lines or refinancing their mortgages. Very large implications for retirement security.
I have a larger paper on medical debt and financial distress under review. Also, please look at my policy primer Defying Magnets: Centrist Policies in a Polarized World.
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