Psychology of Debt in Rural South India

Arnaud Natal and Christophe Nordman

Journal of Development Studies, 2025, vol. 61, issue 7, 1042-1057

Abstract: This study is the first attempt to examine the extent to which the Big Five personality traits and cognitive skills (Raven scores, numeracy, and literacy scores) are correlated with debt negotiation and debt management in a Global South country; and how social identity – in particular caste and gender – channels the effect of cognition on debt outcomes. Using a panel dataset built from an original household survey (called NEEMSIS) conducted in 2016–2017 and 2020–2021 in rural Tamil Nadu, India, and employing multivariate correlation probit analysis with lagged variables, we find the following. Firstly, conscientiousness is an advantage in the negotiation and management of debt, particularly for non-Dalit women, suggesting that, in a rural patriarchal context, women leverage personality traits to overcome the constraints of social identity. Secondly, emotional stability is a disadvantage in both debt negotiation and management. Thirdly, the role of cognition and in particular the Raven score is ambiguous.

Date: 2025
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Working Paper: Psychology of Debt in Rural South India (2024)
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DOI: 10.1080/00220388.2025.2451871

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