Psychological and behavioral consequences of debt and its mechanism

Abstract: Debt is a legally or morally binding obligation on the part of an individual to repay another person or institution, either immediately or at some point in the future. As the prevalence of indebtedness among Chinese residents continues to escalate, there is growing concern over the psychological and behavioral repercussions associated with debt. Debt-induced stress can result in adverse effects on mental health, shortsighted decision-making, consumption patterns, and even unethical bebavior. Furthermore, these impacts may extend beyond the indebted individual, affecting their romantic partner and offspring. The negative effects of indebtedness can be elucidated through the threat-compensation mechanism and the cognitive resource depletion mechanism. Future research is suggested to identify additional psychological and behavioral consequences stemming from indebtedness, delineate the boundaries of these effects, explore the various dimensions of debt, develop new methodologies and paradigms for studying debt, and ultimately construct an integrated theoretical framework that describes the nature of indebtedness and provides insights into its consequences.