Advertisement

Journal of Happiness Studies

, Volume 18, Issue 3, pp 903–937 | Cite as

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

  • Louis TayEmail author
  • Cassondra Batz
  • Scott Parrigon
  • Lauren Kuykendall
Research Paper

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 

References

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

  1. *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.CrossRefGoogle Scholar
  2. *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
  3. *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
  4. *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.CrossRefGoogle Scholar
  5. 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.CrossRefGoogle Scholar
  6. Cantril, H. (1965). The pattern of human concerns. New Brunswick, NJ: Rutgers University Press.Google Scholar
  7. *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.CrossRefGoogle Scholar
  8. *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.CrossRefGoogle Scholar
  9. *Dew, J., & Yorgason, J. (2010). Economic pressure and marital conflict in retirement-aged couples. Journal of Family Issues, 31(2), 164–188.CrossRefGoogle Scholar
  10. Diener, E. (1984). Subjective well-being. Psychological Bulletin, 95(3), 542–575.CrossRefGoogle Scholar
  11. 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.CrossRefGoogle Scholar
  12. 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.CrossRefGoogle Scholar
  13. 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.CrossRefGoogle Scholar
  14. *Drentea, P. (2000). Age, debt and anxiety. Journal of Health and Social Behavior, 41(4), 437.CrossRefGoogle Scholar
  15. *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.CrossRefGoogle Scholar
  16. 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
  17. 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.CrossRefGoogle Scholar
  18. *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
  19. *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.CrossRefGoogle Scholar
  20. Headey, B., & Wooden, M. (2004). The effects of wealth and income on subjective well-being and ill-being. Economic Record, 80(s1), S24–S33.CrossRefGoogle Scholar
  21. Hobfoll, S. E. (1989). Conservation of resources: A new attempt at conceptualizing stress. American Psychologist, 44(3), 513–524.CrossRefGoogle Scholar
  22. Hobfoll, S. E. (2002). Social and psychological resources and adaptation. Review of General Psychology, 6(4), 307–324.CrossRefGoogle Scholar
  23. *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
  24. 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.CrossRefGoogle Scholar
  25. 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.CrossRefGoogle Scholar
  26. 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.CrossRefGoogle Scholar
  27. 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
  28. 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.CrossRefGoogle Scholar
  29. *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.CrossRefGoogle Scholar
  30. *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.CrossRefGoogle Scholar
  31. 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.CrossRefGoogle Scholar
  32. *Morra, D. J., Regehr, G., & Ginsburg, S. (2008). Anticipated debt and financial stress in medical students. Medical Teacher, 30(3), 313–315.CrossRefGoogle Scholar
  33. *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.CrossRefGoogle Scholar
  34. Oishi, S., & Diener, E. (2001). Goals, culture, and subjective well-being. Personality and Social Psychology Bulletin, 27(12), 1674–1682.CrossRefGoogle Scholar
  35. *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.CrossRefGoogle Scholar
  36. 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.CrossRefGoogle Scholar
  37. R Core Team. (2015). R: A language and environment for statistical computing. Vienna: R Foundation for Statistical Computing.Google Scholar
  38. 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.CrossRefGoogle Scholar
  39. Rosseel, Y. (2012). Lavaan: An R package for sturctural equation modeling. Journal of Statistical Software, 48(2), 1–36.CrossRefGoogle Scholar
  40. 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.CrossRefGoogle Scholar
  41. 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.CrossRefGoogle Scholar
  42. Tay, L., & Diener, E. (2011). Needs and subjective well-being. Journal of Personality and Social Psychology, 101(4), 354–365. doi: 10.1037/a0023779.CrossRefGoogle Scholar
  43. Tonidandel, S., & LeBreton, J. M. (2011). Relative importance analysis: A useful supplement to regression analysis. Journal of Business and Psychology, 26(1), 1–9.CrossRefGoogle Scholar
  44. 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
  45. Veenhoven, R., & Hagerty, M. (2006). Rising happiness in nations 1946–2004: A reply to Easterlin. Social Indicators Research, 79(3), 421–436.CrossRefGoogle Scholar
  46. *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
  47. *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

Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  • Louis Tay
    • 1
    Email author
  • Cassondra Batz
    • 1
  • Scott Parrigon
    • 1
  • Lauren Kuykendall
    • 2
  1. 1.Department of Psychological SciencesPurdue UniversityWest LafayetteUSA
  2. 2.George Mason UniversityFairfaxUSA

Personalised recommendations