Debt and Subjective Well-Being: Does the Type of Debt Matter?

Tristan Coste; Caroline Henchoz; Boris Wernli

doi:10.2478/sjs-2020-0022

Abstract

Based on longitudinal analyses of data from the Swiss Household Panel, this paper investigates the effect of different types of debt on two evaluative measures of subjective well-being: financial satisfaction and life satisfaction. Payment arrears reduce financial satisfaction more than loans or the accumulation of different types of debt (arrears and loans). This negative effect is stable over time. Conversely, each additional year with arrears decreases life satisfaction, confirming the overall and general negative effect of arrears on all domains of daily life, especially for the elderly.

References

Angel, Stefan, and Karin Heitzmann. 2015. Over-Indebtedness in Europe: The Relevance of Country- Level Variables for the over-Indebtedness of Private Households. Journal of European Social Policy 25(3):331–351.10.1177/0958928715588711
Search in Google Scholar Back to article
Archuleta, Kristy L., Anita Dale, and Scott M. Spann. 2013. College Students and Financial Distress: Exploring Debt, Financial Satisfaction and Financial Anxiety. Journal of Financial Counseling and Planning 24(2):50–62.
Search in Google Scholar Back to article
Berger, Lawrence M., J. Michael Collins, and Laura Cuesta. 2015. Household Debt and Adult Depressive Symptoms in the United States. Journal of Family and Economic Issues 37(1):42–57.10.1007/s10834-015-9443-6
Search in Google Scholar Back to article
Betti, Gianni, Neil Dourmashkin, Mariacristina Rossi, and Ya Ping Yin. 2007. Consumer Over-indebtedness in the EU: Measurement and Characteristics. Journal of Economic Studies 34(2):136–156.10.1108/01443580710745371
Search in Google Scholar Back to article
Białowolski, Piotr. 2018. Hard Times! How Do Households Cope with Financial Difficulties? Evidence from the Swiss Household Panel. Social Indicators Research 139(1):147–61.10.1007/s11205-017-1711-4
Search in Google Scholar Back to article
Brown, Sarah, and Daniel Gray. 2016. Household Finances and Well-Being in Australia: An Empirical Analysis of Comparison Effects. Journal of Economic Psychology 53: 17–36.10.1016/j.joep.2015.12.006
Search in Google Scholar Back to article
Brown, Sarah, Karl Taylor, and Stephen Wheatley Price. 2005. Debt and Distress: Evaluating the Psychological Cost of Credit. Journal of Economic Psychology 26(5): 642–663.10.1016/j.joep.2005.01.002
Search in Google Scholar Back to article
Brüggen, Elisabeth C., Jens Hogreve, Maria Holmlund, Sertan Kabadayi, and Martin Löfgren. 2017. Financial Well-Being: A Conceptualization and Research Agenda. Journal of Business Research 79: 228–237.10.1016/j.jbusres.2017.03.013
Search in Google Scholar Back to article
Cheung, Felix and Richard E. Lucas. 2014. Assessing the Validity of Single-item Life Satisfaction Measures: Results fromt Three Large Samples. Quality of Life Research 23(10): 2809–2818.10.1007/s11136-014-0726-4
Search in Google Scholar Back to article
Christin, Thomas. 2012. Endettement des Jeunes Adultes. Analyses Complémentaires de l’Endettement des Jeunes Adultes. Neuchatel: FSO (Swiss Federal Statistical Office).
Search in Google Scholar Back to article
Clayton, Maya, José Liñares-Zegarra, and John O. S. Wilson. 2015. Does Debt Affect Health? Cross Country Evidence on the Debt-Health Nexus. Social Science ---amp--- Medicine 130: 51–58.10.1016/j.socscimed.2015.02.002
Search in Google Scholar Back to article
D’Alessio, Giovanni, and Stefano Lezzi. 2013. Household Over-Indebtedness: Definition and Measurement with Italian Data. Bank of Italy Occasional Paper No. 149.10.2139/ssrn.2243578
Search in Google Scholar Back to article
Diener, Ed. 1984. Subjective Well-Being. Psychological Bulletin 95(3):542–575.10.1037/0033-2909.95.3.542
Search in Google Scholar Back to article
Diener, Ed, Robert A. Emmons, Randy J. Larsen, and Sharon Griffin. 1985. The Satisfaction With Life Scale. Journal of Personality Assessment 49(1): 71–75.10.1207/s15327752jpa4901_13
Search in Google Scholar Back to article
Diener, Ed, Eunkook M. Suh, Richard E. Lucas, and Heidi L. Smith. 1999. Subjective Well-Being: Three Decades of Progress. Psychological Bulletin 125(2): 276–302.10.1037/0033-2909.125.2.276
Search in Google Scholar Back to article
Drentea, Patricia. 2000. Age, Debt and Anxiety. Journal of Health and Social Behavior 41: 437–450.10.2307/2676296
Search in Google Scholar Back to article
Drentea, Patricia, and John R. Reynolds. 2012. Neither a Borrower Nor a Lender Be. Journal of Aging and Health 24(4): 673–695.10.1177/0898264311431304
Search in Google Scholar Back to article
European Commission. 2008. Towards a Common Operational European Definition of Over-Indebtedness. OEE Etudes. Brussels.
Search in Google Scholar Back to article
Fitch, Chris, Sarah Hamilton, Paul Bassett, and Ryan Davey. 2011. The Relationship between Personal Debt and Mental Health: A Systematic Review. Mental Health Review Journal 16(4): 153–166.10.1108/13619321111202313
Search in Google Scholar Back to article
Gathergood, John. 2012. Debt and Depression: Causal Links and Social Norm Effects. The Economic Journal 122(563): 1094–1140.10.1111/j.1468-0297.2012.02519.x
Search in Google Scholar Back to article
Georgarakos, Dimitris, and Sven Fürth. 2015. Household Repayment Behavior: The Role of Social Capital and Institutional, Political, and Religious Beliefs. European Journal of Political Economy 37: 249–265.10.1016/j.ejpoleco.2014.10.001
Search in Google Scholar Back to article
Goode, Jackie. 2012. Feeding the Family When the Wolf ’s at the Door: The Impact of Over-Indebtedness on Contemporary Foodways in Low-Income Families in the UK. Food and Foodways 20(1): 8–30.10.1080/07409710.2012.652016
Search in Google Scholar Back to article
Henchoz, Caroline, and Tristan Coste. 2017. Endettement Problématique des Jeunes et Solidarité Familiale. Recherches Familiales 14(1): 37–48.10.3917/rf.014.0037
Search in Google Scholar Back to article
Henchoz, Caroline, and Boris Wernli. 2012. Ist die Jugendverschuldung in der Schweiz Höher als jene der Erwachsenen? Die Volkswirtschaft Das Magazin Für Wirtschaftspolitik 1/2: 53–56.
Search in Google Scholar Back to article
Hiilamo, Aapo, and Emily Grundy. 2018. Household Debt and Depressive Symptoms among Older Adults in Three Continental European Countries. Ageing ---amp--- Society 40(2): 1–27.10.1017/S0144686X18001113
Search in Google Scholar Back to article
Hira, Tahira K., and Olive M. Mugenda. 1998. Predictors of Financial Satisfaction: Differences between Retirees and Non Retirees. Journal of Financial Counseling and Planning 9(2): 75–83.
Search in Google Scholar Back to article
Kahneman, Daniel. 1999. Objective happiness. Pp. 3–25 in Well-being: The Foundations of hedonic Psychology, edited by Daniel Kahneman, Ed Diener, and Norbert Schwarz. New York: Russell Sage Foundation.
Search in Google Scholar Back to article
Lucas, Richard and Brent Donnellan. 2012. Estimating the Reliability of Single-Item Life Satisfaction Measures: Results from Four National Panel Studies. Social Indicators Research 105(3): 323–331.10.1007/s11205-011-9783-z
Search in Google Scholar Back to article
Meltzer, Howard, Paul Bebbington, Traolach Brugha, Michael Farrell, and Rachel Jenkins. 2013. The Relationship between Personal Debt and Specific Common Mental Disorders. The European Journal of Public Health 23(1): 108–113.10.1093/eurpub/cks021
Search in Google Scholar Back to article
Nettleton, Sarah, and Roger Burrows. 2001. Families Coping with the Experience of Mortgage Repos-session in the ‘New Landscape of Precariousness’. Community, Work ---amp--- Family 4(3): 253–272.10.1080/01405110120089332
Search in Google Scholar Back to article
Norvilitis, Jill M., Michelle M. Merwin, Timothy M. Osberg, Patricia V Roehling, Paul Young, and Michele M. Kamas. 2006. Personality Factors, Money Attitudes, Financial Knowledge, and Credit-Card Debt in College Students. Journal of Applied Social Psychology 36(6): 1395–1413.10.1111/j.0021-9029.2006.00065.x
Search in Google Scholar Back to article
Oishi, Shigehiro, Ulrich Schimmack, and Ed Diener. 2001. Pleasures and Subjective Well-Being. European Journal of Personality 15(2): 153–167.10.1002/per.406
Search in Google Scholar Back to article
Osberg, Lars, and Andrew Sharpe. 2002. Une Évaluation de l’Indicateur du Bien-Être Économique dans les Pays de l’OCDE. Paper presented at SÉMINAIRE DARES, Paris, France, October 15, 2002.
Search in Google Scholar Back to article
Prawitz, Aimee D., E. Thomas Garman, Benoit Sorhaindo, Barbara O’Neill, Jinhee Kim, and Patricia Drentea. 2006. InCharge Financial Distress/Financial Well-Being Scale: Development, Administration, and Score Interpretation. Journal of Financial Counseling and Planning 17(1): 34–50.10.1037/t60365-000
Search in Google Scholar Back to article
Rabe-Hesketh, Sophia, and Anders Skrondal. 2012. Multilevel and Longitudinal Modeling Using Stata. College Station: Stata Press.
Search in Google Scholar Back to article
Reading, Richard, and Shirley Reynolds. 2001. Debt, Social Disadvantage and Maternal Depression. Social Science ---amp--- Medicine 53: 441–453.10.1016/S0277-9536(00)00347-6
Search in Google Scholar Back to article
Richardson, Thomas, Peter Elliott, and Ronald Roberts. 2013. The Relationship between Personal Un-secured Debt and Mental and Physical Health: A Systematic Review and Meta-Analysis. Clinical Psychology Review 33(8): 1148–1162.10.1016/j.cpr.2013.08.009
Search in Google Scholar Back to article
Richardson, Thomas, Peter Elliott, Ronald Roberts, and Megan Jansen. 2017. A Longitudinal Study of Financial Difficulties and Mental Health in a National Sample of British Undergraduate Students. Community Mental Health Journal 53(3): 344–352.10.1007/s10597-016-0052-0
Search in Google Scholar Back to article
Schwarze, Uwe. 1999. Schuldnerkarrieren: Institutionelle Problembearbeitung zwischen Sozialberatung und Finanzmanagement. Ergebnisse einer Empirischen Analyse zu Wegen aus Armut und Privater Überschuldung. Arbeitspapier Sfb186. Bremen: Universität Bremen.
Search in Google Scholar Back to article
Shen, Shuying, Abdoul G. Sam, and Eugene Jones. 2014. Credit Card Indebtedness and Psychological Well-Being Over Time: Empirical Evidence from a Household Survey. Journal of Consumer Affairs 48(3): 431–456.10.1111/joca.12047
Search in Google Scholar Back to article
Tay, Louis, Cassondra Batz, Scott Parrigon, and Lauren Kuykendall. 2017. Debt and Subjective Well-Being: The Other Side of the Income-Happiness Coin. Journal of Happiness Studies 18(3): 903–937.10.1007/s10902-016-9758-5
Search in Google Scholar Back to article
Turunen, Elina, and Heikki Hiilamo. 2014. Health Effects of Indebtedness: A Systematic Review. BMC Public Health 14(1): 1–8.10.1186/1471-2458-14-489
Search in Google Scholar Back to article
Wernli, Boris and Caroline Henchoz. 2018. Les effets de genre de la séparation sur l’endettement des hommes et des femmes en Suisse : Une Analyse Longitudinale. Recherches Familiales 15(1): 77–94.10.3917/rf.015.0077
Search in Google Scholar Back to article
Wernli, Boris, Caroline Henchoz, and Tristan Coste. 2020. Bien-être et endettement: Les conséquences émotionnelles des dettes. Pp. 75–92 in Endettement et surendettement en Suisse : Regards croisés, edited by Caroline Henchoz, Tristan Coste, and Fabrice Plomb. Paris: L’Harmattan. Manuscript in press.
Search in Google Scholar Back to article

Debt and Subjective Well-Being: Does the Type of Debt Matter?

Abstract

Paradigm

My account