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Consumer debt holding, income and happiness: evidence from China

Jing Jian Xiao (University of Rhode Island, Kingston, Rhode Island, USA)
Chengyang Yan (Renmin University of China School of Business, Beijing, China)
Piotr Bialowolski (TH Chan School of Public Health, Harvard University, Cambridge, Massachusetts, USA)
Nilton Porto (Human Development and Family Studies, University of Rhode Island, Kingston, Rhode Island, USA)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 25 March 2021

Issue publication date: 6 July 2021




The relationship between debt and happiness is an emerging research topic with significant implications for both theory and practice in economics and business. In China, where the consumer credit market is at an early stage of development, the topic remains under-investigated and the evidence on the debt–well-being link is scarce. The purpose of this study is to examine the association between debt holding and happiness and the moderating role of income in it.


Data used in the study were from three waves (2013, 2015 and 2017) of the China Household Finance Survey. Fixed-effect regressions on panel data were used for data analyses.


The results show that any type of debt holding is negatively associated with happiness. Among seven specific types of debts, four types show negative associations with happiness, which in the order from higher to lower associations, are medical, education, other and housing debt. In addition, negative associations between debt holding and happiness vary among income groups. The results suggest that any debt holding potentially decreases happiness for low- and middle-income consumers only. In addition, holdings of three specific types of debts (medical, education and housing debt) may decrease happiness for both low- and middle-income consumers, and holding two types of debts (business and other debt) may decrease happiness for middle-income consumers only.

Research limitations/implications

Data used in this study originate from one country only. It limits the generalizability of findings to other countries with different institutional backgrounds and different socio-economic characteristics of populations. The results have implications for researchers who study consumer debt behavior and business practitioners who do businesses with Chinese companies and consumers.

Practical implications

China is an emerging economy that is at the early stage of credit market development. The results of this study provide helpful information and insights for business practitioners to explore credit markets and serve credit product clients with various income levels in China.

Social implications

The results of this study are informative for public policies. When introducing credit market-related policies, policymakers should pay attention to people's happiness and to differential welfare effects of holdings of different types of debts and among consumers with various levels of incomes.


Unique contributions of this study include using data from the most recently available waves of the China Household Finance Survey (2013, 2015 and 2017) to study the associations between debt holding and happiness. In addition, the findings of this study enrich the literature of debt and happiness by adding evidence from China, the largest emerging economy in the world, which is helpful for future theory building and business practice on the relationship between debt holding and happiness.



Chengyang Yan received support from the 2019 PhD Joint Training Scholarship of Renmin Business School when he conducted this research during his visit of the University of Rhode Island in 2019-2020.

Chengyang Yan shares the first-authorship for this article.


Xiao, J.J., Yan, C., Bialowolski, P. and Porto, N. (2021), "Consumer debt holding, income and happiness: evidence from China", International Journal of Bank Marketing, Vol. 39 No. 5, pp. 789-809.



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