Household debt and social interactions

Arbeitspapier

Can concern with relative standing, which has been shown to influence consumption and labor supply, also increase borrowing and the likelihood of financial distress? We find that perceived peer income contributes to debt and the likelihood of financial distress among those who consider themselves poorer than their peers. We use unique responses describing perceived peer characteristics from a Dutch population-wide survey to handle major challenges of uncovering social interaction effects on borrowing: (i) debts, unlike conspicuous consumption, are often hidden from peers, and (ii) location is missing in anonymized data. We employ several approaches to uncover exogenous, rather than correlated, effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SAFE Working Paper ; No. 1

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; Macroeconomics: Consumption; Saving; Wealth
• Subject: Household finance ; household debt ; social interactions ; mortgages ; consumercredit ; informal loans

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Georgarakos, Dimitris ; Haliassos, Michalis ; Pasini, Giacomo
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe
• (where): Frankfurt a. M.
• (when): 2013

Further information

• DOI: doi:10.2139/ssrn.2208516
• Handle: http://hdl.handle.net/10419/203263
• Last update: 10.03.2025, 11:44 AM CET