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Debt and Subjective Well-being: The Other Side of the Income-Happiness Coin

Author

Listed:
  • Louis Tay

    (Purdue University)

  • Cassondra Batz

    (Purdue University)

  • Scott Parrigon

    (Purdue University)

  • Lauren Kuykendall

    (George Mason University)

Abstract

To spur research on the topic of debt and its consequences, we conducted a systematic review to integrate the different conceptualizations of debt and to develop a conceptual model explaining mechanisms through which debt influences subjective well-being (SWB). Our conceptual model weaves two common themes from the prior literature: (a) a bottom-up spillover perspective where debt affects SWB via the financial domain (and possibly other life domains that are negatively affected through spillover); and (b) a resource perspective wherein debt is a strain on financial resources which, in turn, lowers SWB. Further, we review past empirical studies assessing the linkage between debt and SWB. A majority of associations (90 %), from 20 studies, revealed at least one significant negative effect between debt and SWB. Further, a random effects meta-analysis of seven studies showed a small relationship between debt and SWB (r = −.07), although there also appear to be critical moderators such as levels of debt, source of debt, and overall financial resources. To test our conceptual model, we conduct a moderated mediation analysis of a large scale representative sample of college graduates with Internet access in the United States (N = 2781) to examine the effects of student loans on SWB. Debt and income accounted for 40 and 60 % of the predicted variance of life satisfaction, respectively. In addition, the bottom-up perspective and resource perspectives were supported. One critical limitation is that there are not many studies on debt and SWB. Future areas for research are discussed.

Suggested Citation

  • Louis Tay & Cassondra Batz & Scott Parrigon & Lauren Kuykendall, 2017. "Debt and Subjective Well-being: The Other Side of the Income-Happiness Coin," Journal of Happiness Studies, Springer, vol. 18(3), pages 903-937, June.
    • Handle: RePEc:spr:jhappi:v:18:y:2017:i:3:d:10.1007_s10902-016-9758-5
    DOI: 10.1007/s10902-016-9758-5
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    Cited by:

    1. Tiffany S. Neman, 2020. "Does Your Neighborhood’s Income Distribution Matter? A Multi-scale Study of Financial Well-Being in the U.S," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(3), pages 951-970, December.
    2. Jantsch, Antje & Le Blanc, Julia & Schmidt, Tobias, 2022. "Wealth and subjective well-being in Germany," Discussion Papers 11/2022, Deutsche Bundesbank.
    3. Anna M. Helka & Dominika Maison, 2021. "Predictors of the Propensity to Incur Loans for Varying Purposes in the Future," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 1114-1128.
    4. Želinský, Tomáš & Soroková, Tatiana & Petríková, Daniela, 2018. "Economic Characteristics and Subjective Well-Being," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 50(3), pages 334-364.
    5. Emma Pleeging & Martijn Burger & Job Exel, 2021. "Hope Mediates the Relation between Income and Subjective Well-Being," Journal of Happiness Studies, Springer, vol. 22(5), pages 2075-2102, June.
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    7. Jing Jian Xiao & Kyoung Tae Kim, 2022. "The Able Worry More? Debt Delinquency, Financial Capability, and Financial Stress," Journal of Family and Economic Issues, Springer, vol. 43(1), pages 138-152, March.
    8. Alexa Balmuth & Julie Miller & Samantha Brady & Lisa D’Ambrosio & Joseph Coughlin, 2021. "Mothers, Fathers, and Student Loans: Contributing Factors of Familial Conflict Among Parents Repaying Student Loan Debt for Children," Journal of Family and Economic Issues, Springer, vol. 42(2), pages 335-350, June.
    9. Susanne M. Syrén & Katja Kokko & Lea Pulkkinen & Jaakko Pehkonen, 2020. "Income and Mental Well-Being: Personality Traits as Moderators," Journal of Happiness Studies, Springer, vol. 21(2), pages 547-571, February.
    10. Piotr Bialowolski & Dorota Weziak-Bialowolska & Eileen McNeely, 2021. "The Role of Financial Fragility and Financial Control for Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(3), pages 1137-1157, June.
    11. Teodora Slavinski & Dragan Bjelica & Dejana Pavlović & Valentina Vukmirović, 2021. "Academic Performance and Physical Activities as Positive Factors for Life Satisfaction among University Students," Sustainability, MDPI, vol. 13(2), pages 1-17, January.
    12. Monika Baryła-Matejczuk & Viktorija Skvarciany & Andrzej Cwynar & Wiesław Poleszak & Wiktor Cwynar, 2020. "Link between Financial Management Behaviours and Quality of Relationship and Overall Life Satisfaction among Married and Cohabiting Couples: Insights from Application of Artificial Neural Networks," IJERPH, MDPI, vol. 17(4), pages 1-16, February.
    13. Ana I. Moro Egido, 2021. "Social Comparisons; the behavioural component," ThE Papers 21/04, Department of Economic Theory and Economic History of the University of Granada..
    14. M. Joseph Sirgy, 2018. "The Psychology of Material Well-Being," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 13(2), pages 273-301, June.
    15. Nilton Porto & Soo Hyun Cho & Michael Gutter, 2021. "Student Loan Decision Making: Experience as an Anchor," Journal of Family and Economic Issues, Springer, vol. 42(4), pages 773-784, December.
    16. Mansi Jain & Gagan Deep Sharma & Mandeep Mahendru, 2019. "Can I Sustain My Happiness? A Review, Critique and Research Agenda for Economics of Happiness," Sustainability, MDPI, vol. 11(22), pages 1-36, November.
    17. Grzegorz Wałęga & Agnieszka Wałęga, 2021. "Over-indebted Households in Poland: Classification Tree Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 153(2), pages 561-584, January.
    18. M. Joseph Sirgy & Dong-Jin Lee & Grace B. Yu, 2020. "Shopping-Life Balance: Towards a Unifying Framework," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 15(1), pages 17-34, March.
    19. Arjen Schepen & Martijn J. Burger, 2022. "Professional Financial Advice and Subjective Well-Being," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 17(5), pages 2967-3004, October.
    20. Piotr Białowolski & Dorota Węziak-Białowolska & Tyler J. VanderWeele, 2019. "The impact of savings and credit on health and health behaviours: an outcome-wide longitudinal approach," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 64(4), pages 573-584, May.
    21. Andrzej Cwynar & Wiktor Cwynar & Monika Baryła-Matejczuk & Moises Betancort, 2019. "Sustainable Debt Behaviour and Well-Being of Young Adults: The Role of Parental Financial Socialisation Process," Sustainability, MDPI, vol. 11(24), pages 1-26, December.
    22. Yunchao Cai & Selamah Abdullah Yusof & Ruzita Bt Mohd Amin & Mohd Nahar Mohd Arshad, 2021. "The Multi-dimensional Effect of Household Debt on Urban Individual Well-Being in Klang Valley Malaysia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(1), pages 23-44, November.
    23. Jing Jian Xiao & Chunsheng Tao, 2020. "Consumer finance/household finance: the definition and scope," China Finance Review International, Emerald Group Publishing Limited, vol. 11(1), pages 1-25, June.
    24. Narang Park & Jae Min Lee & Wookjae Heo, 2021. "Life Satisfaction in Time Orientation," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 16(4), pages 1717-1731, August.
    25. Calcagnini, Giorgio & Perugini, Francesco, 2019. "Social capital and well-being in the Italian provinces," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).

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