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The burden of debt: How over-indebtedness undermines need satisfaction

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  • Wałęga, Grzegorz
  • Wałęga, Agnieszka

Abstract

This study examines how over-indebtedness relates to households’ ability to meet essential and non-essential needs, distinguishing between objective repayment burden and subjective perceptions of financial strain. Using microdata from a nationwide survey of indebted households in Poland, the analysis combines composite indicators of needs satisfaction with ordered probit and linear models. The results show that both objective and subjective over-indebtedness are associated with lower levels of needs satisfaction, but subjective debt burden exhibits a consistently stronger relationship with unmet needs. The findings further indicate systematic differences across consumption domains: households with perceived debt burden protect essential consumption while postponing discretionary expenditures, consistent with trade-off behaviour under perceived scarcity. These results highlight the importance of behavioural and psychological dimensions of debt in shaping material well-being, suggesting that financial vulnerability depends not only on repayment capacity but also on how debt is subjectively experienced.

Suggested Citation

  • Wałęga, Grzegorz & Wałęga, Agnieszka, 2026. "The burden of debt: How over-indebtedness undermines need satisfaction," Journal of Behavioral and Experimental Finance, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:beexfi:v:50:y:2026:i:c:s2214635026000274
    DOI: 10.1016/j.jbef.2026.101165
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