ArticlePublisher preview available

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

Springer Nature
Journal of Happiness Studies
Authors:
Louis Tay at Purdue University West Lafayette
Louis Tay
Cassondra Batz-Barbarich at Lake Forest College
Cassondra Batz-Barbarich
Scott Parrigon at Google Inc.
Scott Parrigon
Lauren Kuykendall at George Mason University
Lauren Kuykendall
Read publisher preview
Download citation
To read the full-text of this research, you can request a copy directly from the authors.

Abstract and Figures

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 wellbeing (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.
Figures - available from: Journal of Happiness Studies
This content is subject to copyright. Terms and conditions apply.
A preview of this full-text is provided by Springer Nature.
Learn more
Content available from Journal of Happiness Studies 
This content is subject to copyright. Terms and conditions apply.
RESEARCH PAPER
Debt and Subjective Well-being: The Other Side
of the Income-Happiness Coin
Louis Tay
1
•Cassondra Batz
1
•Scott Parrigon
1
•
Lauren Kuykendall
2
Published online: 21 May 2016
Springer Science+Business Media Dordrecht 2016
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, respec-
tively. 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.
Keywords Subjective well-being Debt Review Finances Financial well-being
Happiness Life satisfaction Income Loans Stress
&Louis Tay
stay@purdue.edu
1
Department of Psychological Sciences, Purdue University, West Lafayette, IN 47907, USA
2
George Mason University, Fairfax, USA
123
J Happiness Stud (2017) 18:903–937
DOI 10.1007/s10902-016-9758-5
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
... That repayment worry 2 has adverse effects on individuals is unequivocal. Empirical studies show that debt worry negatively affects physical health (Drentea and Lavrakas 2000;Lenton and Mosley 2008), psychological health (Drentea 2000;Elahi et al. 2018;Rogers et al. 2012), and life satisfaction (Tay et al. 2017). ...
... How debt is conceptualized is important for understanding repayment worry, the ultimate outcome of our study. Debt can be conceptualized objectively or subjectively (Tay et al. 2017). Whereas objective conceptualization considers the presence of outstanding debts (i.e., debt status), total amount of debt owed, or debt delinquency (i.e., debt repayment behavior), the subjective conceptualization considers the perception that the debt owed is a financial burden (Tay et al. 2017) and manifests as concern, worry, stress, or anxiety about the debt (Drentea 2000;Tay et al. 2017). ...
... Debt can be conceptualized objectively or subjectively (Tay et al. 2017). Whereas objective conceptualization considers the presence of outstanding debts (i.e., debt status), total amount of debt owed, or debt delinquency (i.e., debt repayment behavior), the subjective conceptualization considers the perception that the debt owed is a financial burden (Tay et al. 2017) and manifests as concern, worry, stress, or anxiety about the debt (Drentea 2000;Tay et al. 2017). Because the focus of this study is the subjective FIGURE 1 | Average total cost of attending degree-granting institutions for first-time, full-time degree/certificate-seeking undergraduate students, by level and control of institution and student living arrangement: Academic year 2022-2023. ...
The Determinants of Student Loan Repayment Worry
Article
Full-text available
  • Apr 2025
  • J CONSUM AFF
Millions of student loan borrowers worry about their loan repayments. Previous research has focused on student loan debt's impact on post‐college outcomes, overlooking psychological aspects like repayment worry. Utilizing data from the 2021 National Financial Capability Survey ( n = 2582), we developed and tested a theoretical model for understanding the determinants of student loan repayment worry (repayment worry) and the moderating effects of gender on the association between stressors (financial hardship and student loan delinquency) and repayment worry. Logistic regression showed that financial hardship and student loan delinquency are significant predictors of repayment worry. The coping resources we studied—financial self‐efficacy, financial satisfaction, and household income—were significantly linked to lower repayment worry, except for financial capability. Notably, gender was a significant moderator of the financial hardship—repayment worry association, with males experiencing stronger effects than females, but did not moderate the student loan delinquency—repayment worry association. Implications for mitigating repayment worry are offered.
View
... greater BNPl usage is associated with lower subjective well-being by increasing money management stress and reducing future financial security. hence, impulsive BNPl use can harm financial well-being, leading to debt accumulation, financial strain, and lower overall well-being (ammerman & Stueve, 2019;cherney et al., 2020;elliott & lewis, 2016;Powell et al., 2023;Schomburgk & hoffmann, 2023;tay et al., 2017). Responsible financial behaviors, careful consideration of repayment abilities, and awareness of the potential consequences of impulsive spending are essential for maintaining financial health and stability, especially among young users of BNPl services (Powell et al., 2023;Schomburgk & hoffmann, 2023). ...
... third, we observed the effect of impulsive BNPl use on financial well-being. this aligns with research demonstrating a negative association between impulsive purchasing and consumption behavior, and financial well-being (Ben-David & Bos, 2021;Sehrawat et al., 2021). in the context of BNPl use, our study is also in line with previous research that found that greater BNPl usage and debt among students were associated with lower overall and financial well-being (ammerman & Stueve, 2019;cherney et al., 2020;elliott & lewis, 2016;Powell et al., 2023;Schomburgk & hoffmann, 2023;tay et al., 2017). in the context of BNPl services, financially responsible behaviors are closely related to young users' financial well-being (Powell et al., 2023), and greater BNPl usage is associated with lower subjective well-being by increasing current money management stress and decreasing expected future financial security (Schomburgk & hoffmann, 2023). ...
The God locus of financial control, impulsive use of buy-now-pay-later service, and subjective financial well-being among accounting students: the role of social comparison tendencies
Article
Full-text available
  • Mar 2025
This study investigated how the God locus of financial control influences impulsive purchase behavior with buy-now-pay-later (BNPL) services and affects financial well-being. The mediating and moderating roles of impulsive BNPL usage and social comparison tendencies, respectively, were explored in the relationships between the God locus of financial control and impulsive BNPL usage behavior and financial well-being. A time-lagged cross-sectional survey was conducted with data collected using a self-report questionnaire. The participants were 473 accounting undergraduate students from Indonesia selected using purposive sampling. The moderating and mediating procedure (MODMED) was conducted with PROCESS Macro version 4 to evaluate the hypotheses. This study found that the God locus of financial control is negatively associated with impulsive BNPL usage but positively associated with financial well-being. Furthermore, the findings suggest that impulsive BNPL use is negatively related to financial well-being and mediates the association between the God locus of financial control and well-being. As expected, social comparison tendencies are a boundary condition in the relationships between the God locus of financial control and both impulsive BNPL usage and financial well-being.
View
... Moreover, for households trying to keep up with the living standards of their peers, excessive debt for financing consumption might be associated with financial hardship and harmful psychological outcomes that reduce SWB (Białowolski et al., 2019;Xiao et al., 2021). Notably, subjective debt burden manifested by worry, stress and anxiety over debt is a stronger predictor of reduced SWB than objective debt (Tay et al., 2017). Additionally, some types of debt may exhibit stronger negative associations with SWB than others. ...
How Does Relative Consumption Deprivation Influence Subjective Well-Being? The Moderating Role of Housing Wealth
Article
Full-text available
  • Mar 2025
Exploring the relation between inequality and subjective well-being is an enduring topic in happiness economics. However, less attention has been paid to clarifying the relation from the perspective of micro-level consumption inequality among households. A household often focuses more on its relative consumption status than overall consumption inequality by comparing its own consumption with that of other households with higher consumption levels in the reference group. This upward comparison results in relative consumption deprivation. Using data from the 2019 China Household Finance Survey, the relation between relative consumption deprivation and household subjective well-being and the moderating role of housing wealth are investigated in this study. The results reveal a negative association between relative consumption deprivation and subjective well-being, with the relative deprivation of subsistence consumption being more closely related to reduced subjective well-being than that of developmental consumption. Moreover, this association exhibits an inverted U-shaped pattern with increasing housing wealth, implying that relative consumption deprivation is more negatively associated with the subjective well-being of households with either relatively low or high levels of housing wealth, while for other households, the inverse association is weaker. The heterogeneity tests indicate that relative consumption deprivation has stronger negative associations with the subjective well-being of households with larger sizes, experiencing economic deterioration, or residing in first-tier and second-tier cities. Further analyses show that when households are facing an upward trend in housing prices, the linkage between relative consumption deprivation and the loss of subjective well-being is stronger in households without dwellings than in those with dwellings.
View
... Couples with high economic wealth may participate in activities contributing to stress reduction and conflict resolution (Dakin and Wampler, 2008) resulting in improved marriages. Economic hardship or having debt may increase marital conflict over money and economic pressure, leading to marital dissatisfaction and lower happiness (Dew, 2008;Tay et al., 2017). ...
Spouses’ personalities and marital satisfaction in Chinese families
Article
Full-text available
  • Feb 2025
Introduction Considering the traditional Confucian values prevalent in Chinese society, we study the effects of the spouses’ personalities and household sociodemographic circumstances on the marital satisfaction of marriage partners. Methods We evaluate the factors that contribute to marital satisfaction, using the 2018 wave of the Chinese Family Panel Survey, including 6,603 households. We use information on both spouses’ Big-Five personality traits, and marital satisfaction. In addition, the effects of the household’s sociodemographic factors on the spouses’ marital satisfaction are estimated. We employ the Actor–Partner Interdependence Model to estimate the effects, using simultaneous equation modeling. Results We find significant actor effects of personality, i.e., agreeableness, openness, conscientiousness, and extroversion, but few partner effects on marital satisfaction. In addition to other socioeconomic effects, we find strong actor effects of subjective social status on marital satisfaction for both spouses. The wife’s level of education had a negative effect on her marital satisfaction. Discussion The effects of the spouses’ personalities and sociodemographic circumstances on their marital satisfaction fit the Confucian values fostered in China. The wife’s double burden of having a job and taking care of household duties, negatively affecting her marital satisfaction, may be alleviated by proper government policies.
View
View
ASSESSING FINANCIAL LITERACY IMPACT ON THE FINANCIAL BEHAVIOR OF GRADE 12 ABM STUDENTS OF A NATIONAL HIGH SCHOOL IN THE PHILIPPINES
Article
Full-text available
  • Oct 2024
This quantitative study assessed the impact of financial literacy on the financial behavior of Grade 12 ABM students of a National High School in the Philippines. The respondents of the study were 100 Grade 12 ABM students, selected based on a simple random sampling method. Financial literacy serves several crucial purposes like budgeting, investing, and debt management. Based on the findings, show that since the Department of Education institutionalizes and intensifies the integration of Financial Education in the K to 12 Basic Education Curriculum, it helps the students become more equipped when it comes to financial dealings. Grade 12 ABM students have a very high level of financial literacy. Financial literacy is a foundational knowledge base where practical skills are incorporated. Also, it was found that financial literacy can enhance student’s skills and abilities to make more informed choices and ultimately lead to a very high level of financial behavior. As recommended, Grade 12 ABM students must continue gaining knowledge in financial literacy. They must enhance their capabilities to become more proficient, expand their competency, and improve their skills and knowledge which will result in positive financial behavior. Thus, the result of this study shows that Grade 12 ABM students have a reasonable level of financial literacy which impacts their financial behavior.
View
How do digital financial literacy, financial behavior, and skills affect financial well-being? An Exploratory Study on Gen Z
Article
Full-text available
  • Feb 2024
Rapid development in the digital financial landscape nowadays requires individuals to have sufficient financial literacy and master digital financial literacy. This study aims to analyze the direct relationship between DFL, financial behaviour, and financial skill on FWB and investigate the mediation effect of financial behaviour and skills on the relationship between DFL and FWB. Motivated by the worrying financial condition of Generation Z, this exploratory study is conducted using a self-administered questionnaire distributed in Riau Province, which resulted in 108 valid responses. A variance-based structural equation modeling using SmartPLS is utilized to test the relationship between constructs. Findings reveal that financial behavior and financial skills directly influence FWB. The evidence showed that DFL influences FWB indirectly through financial behavior. This research suggests that the government and policymakers provide knowledge about DFL to Generation Z.
View
Did COVID-19 hurt consumer financial well-being? Factors associated with consumer bankruptcy risks during the pandemic
Article
  • Jan 2025
Purpose The COVID-19 pandemic resulted in millions of lives lost. Beyond its devastating impact, did it also hurt consumer financial well-being? Consumer bankruptcy is often seen as a sign of experiencing extremely overextended debt burdens. This study aimed to identify factors associated with bankruptcy risks, specifically focusing on insolvency (when total debt exceeds total assets) and debt delinquency (being late in debt payments for 60 or more days). Design/methodology/approach Data were from the US 2022 Survey of Consumer Finances. Two bankruptcy risk variables included insolvency and debt delinquency. Potential influencing factors included in the analyses were COVID-19-induced shocks, financial capability, ownership of various debts and demographics. Logistic regression models were used to detect potential factors associated with bankruptcy risks. Findings First, a COVID-19-induced shock variable, new work schedule, reduced the risk of insolvency and four shock variables (COVID infection with serious persistent symptoms, work disruption due to childcare responsibilities, work reduction and work increase) increased the risk of debt delinquency. Second, financial capability factors played a crucial role. Desirable financial behavior reduced both risks of insolvency and debt delinquency. Subjective financial knowledge only reduced the risk of debt delinquency. Third, the types of debts held mattered. Holding credit card debt, student loans and other debts increased the risks of both insolvency and debt delinquency. Interestingly, holding auto loans reduced the risk of insolvency. Research limitations/implications The data are limited to cross-sectional so that findings are only correlational. The data are from one developed economy, and the results may not be generalized to other economies, especially developing economies. Also, due to the lack of direct measure of consumer bankruptcy, only bankruptcy risks are measured in the study, but the findings can still be informative for understanding consumer bankruptcy behavior. Practical implications The results of this study have practical implications for government, business and nonprofit organizations to help consumers reduce the bankruptcy risks. The results suggest that when facing external shocks such as the COVID-19 pandemic, any work-related adjustments may help workers maintain income levels and reduce consumer bankruptcy risks, especially debt delinquency risk. Also, consumers should be encouraged to engage in desirable financial behaviors, such as spending within their income, seeking information before making financial decisions, using financial professionals and planning ahead, to reduce both insolvency and debt delinquency risks. Originality/value This study is the first to examine COVID-19-induced factors on bankruptcy risks, enriching the literature of COVID-19 impacts on consumers. Bankruptcy risks are used as negative indicators of consumer well-being, expanding the literature of consumer well-being. The study also examines if financial capability has the potential to reduce bankruptcy risks, an advancement in the literature of financial capability.
View
View
Testing mediating variables and relationships with relative weight analysis
Article
  • Dec 2024
The purpose of this research article is to put forth a new research process for employing relative weight analysis (RWA) to test for mediating variables and relationships. When implementing this new research process, RWA is employed as the primary analysis technique implementing a modified joint significance test with RWA results. An empirical demonstration of this new research process is implemented, and the findings are compared to results from multiple regression analysis implementing the PROCESS macro. In situations where there a relatively large number of independent variables that are highly correlated, the findings suggest that employing RWA is better suited to test for mediating variables and relationships. This is the first article which addresses employing RWA to test for mediating variables and relationships.
View
Methods for Integrating Moderation and Mediation: A General Analytical Framework Using Moderated Path Analysis
Article
Full-text available
  • Mar 2007
Studies that combine moderation and mediation are prevalent in basic and applied psychology research. Typically, these studies are framed in terms of moderated mediation or mediated moderation, both of which involve similar analytical approaches. Unfortunately, these approaches have important shortcomings that conceal the nature of the moderated and the mediated effects under investigation. This article presents a general analytical framework for combining moderation and mediation that integrates moderated regression analysis and path analysis. This framework clarifies how moderator variables influence the paths that constitute the direct, indirect, and total effects of mediated models. The authors empirically illustrate this framework and give step-by-step instructions for estimation and interpretation. They summarize the advantages of their framework over current approaches, explain how it subsumes moderated mediation and mediated moderation, and describe how it can accommodate additional moderator and mediator variables, curvilinear relationships, and structural equation models with latent variables.
View
View
View
View
The impact of financial resources on soldiers' well-being
Article
  • Jan 2014
The present study examined the impact of financial resources on soldiers' well-being. Using primary data gathered from a large Army installation in the Midwest, results suggested that soldiers with higher credit card debts and lower perceived net worth had lower levels of subjective well-being. Soldiers with greater perceived financial knowledge and larger emergency savings accounts had higher levels of subjective well-being. Results also indicated that automobile loan debt may play a small role in the subjective well-being of soldiers. Personal financial managers, financial planners, counselors, and other military service providers can use this knowledge to identify those whose subjective well-being might be or might become impaired by personal financial distress. © 2014 Association for Financial Counseling and Planning Education®. All rights of reproduction in any form reserved.
View
The relationships between student debt and motivation, happiness, and academic achievement
Article
  • Jan 2009
  • New Zeal J Psychol
The study examines the effects of student debt on the outcomes for individual students. Three hundred and twenty-eight students at the University of Canterbury completed questionnaires asking for information about their debt levels, happiness, attitude to debt and motivation. Their academic records were also obtained. As in previous studies, students with more debt exhibited greater tolerance for it. However, student debt did not have strong associations with individual's motivation. Nor was there any evidence that higher debt levels were related to levels of personal happiness or academic achievement. Overall, the results indicate debt to have little to no impact on the outcome attributes examined in the present study. © This material is
View
College students and financial distress: Exploring debt, financial satisfaction, and financial anxiety
Article
  • Jan 2013
The impact of financial concerns on overall mental health has become a popular topic among researchers and practitioners. In this exploratory study, possible associations of financial anxiety were explored using a sample of 180 college students who sought services at a university peer financial counseling center in a Midwestern state. Of particular interest was the influence of debt on student financial anxiety. To measure financial anxiety, a new scale was developed, the Financial Anxiety Scale (FAS), that can be used as a tool for financial planners, counselors, and educators to identify individuals who are experiencing increased levels of financial distress that may call for a referral to an appropriate professional. Results from two hierarchical regressions indicated that financial satisfaction, student loans, and gender are associated with financial anxiety. © 2013 Association for Financial Counseling and Planning Education. All rights of reproduction in any form reserved.
View
View
View
RWA Web: A Free, Comprehensive, Web-Based, and User-Friendly Tool for Relative Weight Analyses
Article
  • Jun 2014
Over the last 15 years, a number of methodological developments have enabled researchers to draw more accurate inferences concerning the relative contribution (i.e., relative importance) among multiple (often correlated) predictor variables in a regression analysis. One such development has been relative weight analysis (RWA). Researchers can use a RWA to decompose the total variance predicted in a regression model (R 2) into weights that accurately reflect the proportional contribution of the various predictor variables. Prior to RWA, researchers were forced to rely on traditional statistics (e.g., correlations; standardized regression weights), which are known to yield faulty or misleading information concerning variable importance (especially when predictor variables are correlated with one another, which is often the case in organizational research). Although there has been a surge of interest in RWA over the last 10 years, integration of this statistical tool into organizational research has been hampered by the lack of a user-friendly statistical package for implementing RWA. Indeed, most popular statistical packages (e.g., SPSS, SAS) have yet to include RWA protocols into their regression modules. The purpose of this paper is to present a new, free, comprehensive, web-based, user-friendly resource, RWA-Web, which may be used by anyone having simple access to the internet. Our paper is structured as a tutorial on using RWA-Web to examine relative importance in the classic multiple regression model, the multivariate multiple regression model, and the logistic regression model. We also illustrate how RWA-Web may be used to conduct null hypothesis significance tests using advanced bootstrapping procedures.
View