Does Financial Assistance Really Assist? The Impact of Debt on Wellbeing, Health Behavior and Self-Concept in Taiwan

In the current global environment of unpredictable economic adversity, financial help appears to be all the more important in order for people to make it through hard times. Social support theory expects that debt’s adverse impact on subjective well-being can be moderated by access to financial help within one’s social network. This study tests this hypothesis by extending research attention into social contacts and self-concept as well. Using a national probability sample of Taiwan, we conduct regression-estimation-with-measurement modeling to assess the impact of debt and unrealized loss (UL) in housing price on life situation. Our finding shows that both debt and UL produce direct negative impact on happiness and health behaviors, while they has scant influence on social contacts and self-esteem. Financial assistance from kin somewhat moderates the adverse influences of indebtedness, while financial assistance from friends and banks mostly represents a debt trap that leads to lower levels of life satisfaction and self-concept. We conclude that seeking financial help, in general, is a response to rather than a solution for indebtedness.