Debt Holding and Subjective Wellbeing: Borrowing Source and Income As Moderators

Abstract

The objective of this study is to examine the association between debt holding and subjective wellbeing using data from China. In recent years, consumer credit markets have been emerging and Chinese households have started to borrow for consumption. Some statistics show warning signs that Chinese households may borrow too much that could affect the economic stability. Research on debt behaviour of Chinese households is important for the wellbeing of both households and economy in China. Research questions of this study are: 1) Are debt holdings associated with subjective wellbeing; 2) Do borrowing sources and income moderate the association between debt holding and subjective wellbeing? Data used in this study is from the 2016 China Family Panel Study that is nationally representative. Subjective wellbeing was measured by two indicators, life satisfaction and stress. Multivariate linear regression results suggest that holding housing debt, non-housing debt, or both is associated with lower life satisfaction or higher stress after controlling for socioeconomic variables. In addition, borrowing sources and income show some moderation effects on the relationship between debt holding and subjective wellbeing. Results suggest that debt holding may decrease life satisfaction and increase stress. Helping consumers take control of debt may enhance their subjective wellbeing and improve quality of life.

Keywords: debt, subjective wellbeing, credit access, income