Household debt and happiness: evidence from the China Household Finance Survey

Using the China Household Finance Survey Data, this article studies the effect of household debt on happiness. The empirical results based on the ordered logit model show that (1) total household debt will significantly reduce family's happiness; (2) the effect of different types of debt on happiness is heterogeneous, and housing debt and education debt are the main sources of this negative effect, while other types of debt have no significant effect; (3) the different sources of housing debt have different effects on happiness, and only nonbank housing debt significantly reduces people's happiness; and (4) risk attitude plays an important role in the relationship between debt and happiness, where families with a high degree of risk aversion have lower happiness when borrowing money.