Household Debt, Depressive Symptoms, and Socioeconomic Disparities: Evidence on Heterogeneous Effects and Debt Trajectories from South Korea

초록

Household debt has expanded rapidly across advanced economies, yet longitudinal evidence on its mental health consequences remains limited, particularly in Asian contexts. This study examines the within-person association between household debt and depressive symptoms using 17 waves (2007-2023) of the Korean Welfare Panel Study, one of the longest nationally representative panel datasets available for this question. Individual fixed-effects models were estimated on an analytical sample of 195,490 person-year observations from 22,259 individuals. Holding household debt was associated with a 0.31-point increase in CES-D depressive symptoms (SE = 0.028, p < 0.001), representing a 23% attenuation from the cross-sectional OLS estimate of 0.40 and suggesting that roughly one-quarter of the conventional association reflects selection on time-invariant characteristics. Results were robust across alternative debt operationalizations, including logged debt amounts, debt-to-income ratios, and debt shocks. Substantial heterogeneity emerged across population subgroups: the association was 2.3 times larger for the lowest versus highest income tercile, stronger for women than men, and most pronounced among adults aged 55-64. Among debt types, private loans exhibited the largest effect. Importantly, transitioning from indebted to debt-free status was associated with a significant reduction in depressive symptoms, while debt trajectory analysis confirmed that individuals who resolved their debt returned to symptom levels comparable to those who were never indebted. These findings indicate that household debt is a substantive contributing factor to depressive symptomatology, with effects that are concentrated among socioeconomically vulnerable populations and at least partially reversible upon debt resolution.

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