Hard Times! How do Households Cope with Financial Difficulties? Evidence from the Swiss Household Panel

This study investigates impact of debt arrears and various consequential compensatory actions on self-reported satisfaction with life and the financial situation. The link between financial difficulties and the responses they demand has rarely been translated into satisfaction measures in the past....

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Bibliographic Details
Published in:Social indicators research 2018-08, Vol.139 (1), p.147-161
Main Author: Białowolski, Piotr
Format: Article
Language:English
Subjects:
Arrears
Coping
Coping strategies
Debt (Financial)
Deterioration
Family income
Friendship
Heads of Households
Heterogeneity
Households
Human Geography
Life Satisfaction
Microeconomics
Panel data
Public Health
Quality of Life Research
Self report
Social research
Social Sciences
Socioeconomic factors
Sociology
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Summary:This study investigates impact of debt arrears and various consequential compensatory actions on self-reported satisfaction with life and the financial situation. The link between financial difficulties and the responses they demand has rarely been translated into satisfaction measures in the past. This study informs the literature about actual consequences of problems with arrears and impact of different coping strategies on household satisfaction measures. To address the questions at hand, data from the six (2010–2015) waves of the Swiss Household Panel were examined. A panel data model with fixed effects estimator was applied to account for unobserved population heterogeneity and mitigate the issues of omitted variables. The study confirmed that severe debt problems disproportionally affected self-reported satisfaction measures. Responses to arrears, if representing likely long-term solutions, did not signify further deterioration in self-reported measures. However, if arrears required resort to bank credit, disposal of household valuables or borrowing from family and friends, satisfaction with the household financial situation and household head life satisfaction were likely to suffer more.
ISSN:0303-8300
1573-0921
DOI:10.1007/s11205-017-1711-4