2018
Working Paper
HBS Working Paper Series

Good Credit and the Good Life: Credit Scores Predict Subjective Well-Being

By: Joe J. Gladstone and Ashley V. Whillans

Format:Print
| Language:English
| Pages:23

Abstract

Can money buy happiness? To examine this question, research in economics, psychology, and sociology has focused almost exclusively on examining the associations between income, spending or wealth and subjective well-being. Moving beyond this research, we provide the first empirical evidence that credit scores uniquely predict happiness. Across two samples, from the United Kingdom (N=615) and the United States (N=768), credit scores predicted life satisfaction even after controlling for a range of financial covariates, including income, spending, savings, debt, and home-ownership. Respondents with higher credit scores felt more optimistic about their future, promoting happiness. Further, the relationship between credit scores and wellbeing was moderated by participants’ prior awareness of their score. Together, these results suggest that creditworthiness can plausibly increase well-being, either directly or indirectly, meaning that interventions to improve creditworthiness could improve consumer welfare.