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

Louis Tay (), Cassondra Batz, Scott Parrigon and Lauren Kuykendall
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Louis Tay: Purdue University
Cassondra Batz: Purdue University
Scott Parrigon: Purdue University
Lauren Kuykendall: George Mason University

Journal of Happiness Studies, 2017, vol. 18, issue 3, No 15, 903-937

Abstract: 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.

Keywords: Subjective well-being; Debt; Review; Finances; Financial well-being; Happiness; Life satisfaction; Income; Loans; Stress (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s10902-016-9758-5

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