Household Indebtedness and Life Satisfaction in Slovakia

Martin CESNAK

https://doi.org/10.53465/EDAMBA.2023.9788022551274.35-42

 

Abstract. One of the central findings of the economics of happiness literature is that an individual's subjective well-being (SWB) depends not only on economic resources such as income, but also on other dimensions such as wealth including liabilities. While the direct effects of wealth, income and debt have been studied extensively, there is scarce evidence on the effects of debt burden and credit constraints on SWB. The goal of this paper is to analyze the impact of debt burden on life satisfaction of Slovak households, using the Household Finance and Consumption Survey (HFCS) microdata. We show that life satisfaction has generally improved between 2017 and 2021, mainly driven by the indebted households. In general, holding debt is associated with higher life satisfaction, as it goes hand in hand with the wealth accumulation. Importantly, we also analyze the impact of indebtedness at the intensive margin using the debt service-to-income (DSTI) indicator, as an objective measure of debt burden. There are clear hints of a negative relationship between one’s life satisfaction and the intensity of debt. This suggests that the burden is also perceived subjectively and may have an implication for individual happiness. A more comprehensive regression analysis is the subject of further research.

Keywords: Subjective Well-Being, Life Satisfaction, Indebted Households, Survey Data

JEL classification: D19, G40, G51

Fulltext: PDF

Online publication date: 25 January 2024

ISBN: 978-80-225-5127-4

Publisher: University of Economics in Bratislava

Pages: 35-42

 

To cite this proceedings paper (STN ISO 690 and 690-2): 

CESNAK, M. 2024. Household Indebtedness and Life Satisfaction in Slovakia. In PETROVSKÁ, F. (ed.). EDAMBA 2023: Conference Proceedings. Bratislava: University of Economics in Bratislava, 2024. ISBN 978-80-225-5127-4, pp. 35-42.

https://doi.org/10.53465/EDAMBA.2024.9788022551274.35-42