Skip to main content
SpringerLink
Log in

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

  • Research Paper
  • Published:
Journal of Happiness Studies Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5

Similar content being viewed by others

Notes

  1. http://time.com/8740/federal-reserve-debt-bankrate-consumers-credit-card/.

  2. http://www.economist.com/blogs/freeexchange/2011/04/american_government_debt_7.

  3. http://www.forbes.com/sites/johngoodman/2015/02/17/krugman-dont-worry-about-debt-we-owe-it-to-ourselves/.

  4. Debt-related predictors and concepts. Apart from the objective debt and subjective debt, we note that there are also other debt-related constructs that are not included in our model but would be important to mention here. These include high-risk credit behaviors as predictors of debt such as such as differences in the tendencies to overspend on big-ticket purchases (Sussman and Alter 2012). There may also be individual differences in self-regulation as posited by some scholars who have found a positive relation between high-risk health behaviors and credit card debt (Adams and Moore 2007). Other related concepts or indirect measures of debt include the number of credit cards one possesses (e.g., Drentea 2000) and expected debt (e.g., Cooke et al. 2004). These measures do not directly assess debt per se but inform us about the likelihood of the debt based on lifestyle patterns or projections.

  5. Information: http://products.gallup.com/168857/gallup-purdue-index-inaugural-national-report.aspx; Methodology: http://www.gallup.com/174167/temp-methodology-gallup-purdue-index-methodology.aspx.

References

*References marked with an asterisk indicate studies included in the meta-analysis or systematic review

  • *Adams, T., & Moore, M. (2007). High-risk health and credit behavior among 18- to 25-year-old college students. Journal of American College Health, 56(2), 101–108.

    Article  Google Scholar 

  • *Archuleta, K. L., Dale, A., & Spann, S. M. (2013). College students and financial distress: Exploring debt, financial satisfaction, and financial anxiety. Journal of Financial Counseling and Planning, 24(2), 50–62.

    Google Scholar 

  • *Bell, M. M., Nelson, J. S., Spann, S. M., Molloy, C. J., Britt, S. L., & Goff, B. N. (2014). The impact of financial resources on soldiers’ well-being. Journal of Financial Counseling and Planning, 25(1), 41–52.

    Google Scholar 

  • *Brown, S., Taylor, K., & Price, S. W. (2005). Debt and distress: Evaluating the psychological cost of credit. Journal of Economic Psychology, 26(5), 642–663.

    Article  Google Scholar 

  • Bush, N. E., Reger, M. A., Luxton, D. D., Skopp, N. A., Kinn, J., Smolenski, D., & Gahm, G. A. (2013). Suicides and suicide attempts in the US military, 2008–2010. Suicide and Life-Threatening Behavior, 43(3), 262–273. doi:10.1111/sltb.12012.

    Article  Google Scholar 

  • Cantril, H. (1965). The pattern of human concerns. New Brunswick, NJ: Rutgers University Press.

    Google Scholar 

  • *Cooke, R., Barkham, M., Audin, K., Bradley, M., & Davy, J. (2004). Student debt and its relation to student mental health. Journal of Further and Higher Education, 28(1), 53–66.

    Article  Google Scholar 

  • *Creed, P. A., Rogers, M. E., Praskova, A., & Searle, J. (2014). Career calling as a personal resource moderator between environmental demands and burnout in Australian junior doctors. Journal of Career Development, 41(6), 547–561.

    Article  Google Scholar 

  • *Dew, J., & Yorgason, J. (2010). Economic pressure and marital conflict in retirement-aged couples. Journal of Family Issues, 31(2), 164–188.

    Article  Google Scholar 

  • Diener, E. (1984). Subjective well-being. Psychological Bulletin, 95(3), 542–575.

    Article  Google Scholar 

  • Diener, E., & Biswas-Diener, R. (2002). Will money increase subjective well-being? A literature review and guide to needed research. Social Indicators Research, 57(2), 119–169.

    Article  Google Scholar 

  • Diener, E., Suh, E. M., Lucas, R. E., & Smith, H. L. (1999). Subjective well-being: Three decades of progress. Psychological Bulletin, 125(2), 276–302.

    Article  Google Scholar 

  • Diener, E., Tay, L., & Oishi, S. (2013). Rising income and the subjective well-being of nations. Journal of Personality and Social Psychology, 104(2), 267–276. doi:10.1037/a0030487.

    Article  Google Scholar 

  • *Drentea, P. (2000). Age, debt and anxiety. Journal of Health and Social Behavior, 41(4), 437.

    Article  Google Scholar 

  • *Drentea, P., & Reynolds, J. R. (2012). Neither a borrower nor a lender be the relative importance of debt and SES for mental health among older adults. Journal of Aging and Health, 24(4), 673–695.

    Article  Google Scholar 

  • Easterlin, R. A. (1974). Does economic growth improve the human lot? In P. A. David & M. W. Reder (Eds.), Nations and households in economic growth (pp. 89–125). New York: Academic Press.

    Google Scholar 

  • Edwards, J. R., & Lambert, L. S. (2007). Methods for integrating moderation and mediation: a general analytical framework using moderated path analysis. Psychological Methods, 12(1), 1–22.

    Article  Google Scholar 

  • *Grable, J. E., & Joo, S. H. (2006). Student racial differences in credit card debt and financial behaviors and stress. College Student Journal, 40(2), 400–408.

    Google Scholar 

  • *Han, C. K., & Hong, S. I. (2011). Assets and life satisfaction patterns among Korean older adults: Latent class analysis. Social Indicators Research, 100(2), 225–240.

    Article  Google Scholar 

  • Headey, B., & Wooden, M. (2004). The effects of wealth and income on subjective well-being and ill-being. Economic Record, 80(s1), S24–S33.

    Article  Google Scholar 

  • Hobfoll, S. E. (1989). Conservation of resources: A new attempt at conceptualizing stress. American Psychologist, 44(3), 513–524.

    Article  Google Scholar 

  • Hobfoll, S. E. (2002). Social and psychological resources and adaptation. Review of General Psychology, 6(4), 307–324.

    Article  Google Scholar 

  • *Hogan, E., Bryant, S., & Overymyer-Day, L. (2013). Relationships between college students’ credit card debt, undesirable academic behaviors and cognitions, and academic performance. College Student Journal, 47(1), 102–112.

    Google Scholar 

  • Howell, R. T., & Howell, C. J. (2008). The relation of economic status to subjective well-being in developing countries: A meta-analysis. Psychological Bulletin, 134(4), 536–560.

    Article  Google Scholar 

  • Johnson, J. W. (2000). A heuristic method for estimating the relative weight of predictor variables in multiple regression. Multivariate Behavioral Research, 35(1), 1–19.

    Article  Google Scholar 

  • Judge, T. A., Piccolo, R. F., Podsakoff, N. P., Shaw, J. C., & Rich, B. L. (2010). The relationship between pay and job satisfaction: A meta-analysis of the literature. Journal of Vocational Behavior, 77(2), 157–167.

    Article  Google Scholar 

  • Kahneman, D. (1999). Objective happiness. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology (pp. 3–25). New York, NY: Russell Sage Foundation.

    Google Scholar 

  • Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493.

    Article  Google Scholar 

  • *Krause, N., Jay, G., & Liang, J. (1991). Financial strain and psychological well-being among the American and Japanese elderly. Psychology and Aging, 6(2), 170–181.

    Article  Google Scholar 

  • *Lange, C., & Byrd, M. (1998). The relationship between perceptions of financial distress and feelings of psychological well-being in New Zealand university students. International Journal of Adolescence and Youth, 7(3), 193–209.

    Article  Google Scholar 

  • Lucas, R. E., & Schimmack, U. (2009). Income and well-being: How big is the gap between the rich and the poor? Journal of Research in Personality, 43(1), 75–78.

    Article  Google Scholar 

  • *Morra, D. J., Regehr, G., & Ginsburg, S. (2008). Anticipated debt and financial stress in medical students. Medical Teacher, 30(3), 313–315.

    Article  Google Scholar 

  • *Norvilitis, J. M., Szablicki, P. B., & Wilson, S. D. (2003). Factors influencing levels of credit-card debt in college students1. Journal of Applied Social Psychology, 33(5), 935–947.

    Article  Google Scholar 

  • Oishi, S., & Diener, E. (2001). Goals, culture, and subjective well-being. Personality and Social Psychology Bulletin, 27(12), 1674–1682.

    Article  Google Scholar 

  • *Olson-Garriott, A. N., Garriott, P. O., Rigali-Oiler, M., & Chao, R. C. L. (2015). Counseling psychology trainees’ experiences with debt stress: A mixed methods examination. Journal of counseling psychology, 62(2), 202–215.

    Article  Google Scholar 

  • Preacher, K. J., Rucker, D. D., & Hayes, A. F. (2007). Addressing moderated mediation hypotheses: theory, methods, and prescriptions. Multivariate Behavioral Research, 42(1), 185–227.

    Article  Google Scholar 

  • R Core Team. (2015). R: A language and environment for statistical computing. Vienna: R Foundation for Statistical Computing.

    Google Scholar 

  • Richardson, T., Elliott, P., & Roberts, R. (2013). The relationship between personal unsecured debt and mental and physical health: A systematic review and meta-analysis. Clinical Psychology Review, 33(8), 1148–1162.

    Article  Google Scholar 

  • Rosseel, Y. (2012). Lavaan: An R package for sturctural equation modeling. Journal of Statistical Software, 48(2), 1–36.

    Article  Google Scholar 

  • Sheldon, K. M., Abad, N., Ferguson, Y., Gunz, A., Houser-Marko, L., Nichols, C. P., & Lyubomirsky, S. (2009). Persistent pursuit of need-satisfying goals leads to increased happiness: A 6-month experimental longitudinal study. Motivation and Emotion, 34(1), 39–48. doi:10.1007/s11031-009-9153-1.

    Article  Google Scholar 

  • Sussman, A. B., & Alter, A. L. (2012). The exception is the rule: Underestimating and overspending on exceptional expenses. Journal of Consumer Research, 39, 800–814.

    Article  Google Scholar 

  • Tay, L., & Diener, E. (2011). Needs and subjective well-being. Journal of Personality and Social Psychology, 101(4), 354–365. doi:10.1037/a0023779.

    Article  Google Scholar 

  • Tonidandel, S., & LeBreton, J. M. (2011). Relative importance analysis: A useful supplement to regression analysis. Journal of Business and Psychology, 26(1), 1–9.

    Article  Google Scholar 

  • Tonidandel, S., & LeBreton, J. M. (2014). RWA Web: A free, comprehensive, web-based, and user-friendly tool for relative weight analyses. Journal of Business and Psychology, 30, 1–10.

    Google Scholar 

  • Veenhoven, R., & Hagerty, M. (2006). Rising happiness in nations 1946–2004: A reply to Easterlin. Social Indicators Research, 79(3), 421–436.

    Article  Google Scholar 

  • *West, C. P., Shanafelt, T. D., & Kolars, J. C. (2011). Quality of life, burnout, educational debt, and medical knowledge among internal medicine residents. Journal of the American Medical Association, 306(9), 952–960.

    Google Scholar 

  • *Zhang, J., & Kemp, S. (2009). The relationships between student debt and motivation, happiness, and academic achievement. New Zealand Journal of Psychology, 38(2), 24–29.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Psychological Sciences, Purdue University, West Lafayette, IN, 47907, USA

    Louis Tay, Cassondra Batz & Scott Parrigon

  2. George Mason University, Fairfax, USA

    Lauren Kuykendall

Authors
  1. Louis Tay
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Cassondra Batz
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Scott Parrigon
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Lauren Kuykendall
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Louis Tay.

Appendix

Appendix

See Tables 6, 7, 8 and 9.

Table 6 Conceptualization and measurement of debt
Full size table
Table 7 Proposed mechanisms and related perspectives
Full size table
Table 8 Review of past studies on debt and SWB
Full size table
Table 9 Studies Assessing Effects of Debt on SWB Included in Meta-Analysis
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Tay, L., Batz, C., Parrigon, S. et al. Debt and Subjective Well-being: The Other Side of the Income-Happiness Coin. J Happiness Stud 18, 903–937 (2017). https://doi.org/10.1007/s10902-016-9758-5

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10902-016-9758-5

Keywords

Search

Navigation