Exploring Differences in Household Debt across the United States and Euro Area Countries

Christelis, Dimitris; Ehrmann, Michael; Georgarakos, Dimitris

doi:10.1111/jmcb.12769

Cited by 15 publications

(10 citation statements)

References 35 publications

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“…Second, the task in the original experiment is complex, so reproducing the original results will help establish a reliable experimental design to study debt aversion. Thirdly, Meissner (2016) uses a sample of the student population in Germany, a country which -by international standards -is known for moderate levels of household debt (e.g., Christelis et al, 2021), an excessive reliance on cash payments (e.g., von Kalckreuth et al, 2014;Bagnall et al, 2016), and low tuition fees for higher 1 For an extensive survey of laboratory experiments on dynamic stochastic optimization problems see Duffy (2016).…”

Section: Introductionmentioning

confidence: 99%

Intertemporal Consumption and Debt Aversion: A Replication and Extension

Ahrens¹,

Bosch-Rosa²,

Meißner³

2022

Preprint

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We replicate Meissner (2016) where debt aversion was reported for the first time in an intertemporal consumption and saving problem. While Meissner (2016) uses a German sample, our subjects are US undergraduate students. All of the main findings from the original study replicate, with similar effect sizes. Additionally, we extend the original analysis by correlating a new individual index of debt aversion on individual characteristics such as gender, cognitive ability, and risk aversion. The findings suggest that gender and risk aversion are not correlated with debt aversion. However, cognitive ability is positively correlated with debt aversion. Overall, this paper confirms the importance of debt aversion in intertemporal consumption problems and validates the approach of Meissner (2016). JEL Classification

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Section: Introductionmentioning

confidence: 99%

Intertemporal Consumption and Debt Aversion: A Replication and Extension

Ahrens¹,

Bosch-Rosa²,

Meißner³

2022

Preprint

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“…Despite this, we found it necessary to include country dummy variables as they may capture a contextual effect once the household's characteristics are considered. Additionally, some studies report that household debt holding differ substantially across countries, as well as the burden that these debts impose (Christelis et al, 2015).…”

Section: Multivariate Analysismentioning

confidence: 99%

Do social interactions matter for borrowing behaviour of the Europeans aged 50+?

López

Daoudi

Rey‐Ares

2021

IJBM

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PurposeThis paper aims to explore the linkage between households' social interactions and credit context and how these interactions may influence household borrowing decisions.Design/methodology/approachBased on a sample of 45,907 individuals referred to 18 countries, drawn from the Survey of Health, Ageing and Retirement in Europe, different probit regressions are used to test the four hypotheses proposed.FindingsEmpirical evidence confirms that intensive and extensive sociability are positively related to consumer debt holding. However, when social activities are considered separately, there is weak evidence that they are also related to mortgage debt holding and over-indebtedness. Moreover, at this level of analysis, the different nature of the social activities in which the individual participates in may condition the relationship with borrowing behaviour. The findings also show that relative income plays a passive role in household borrowing behaviour, since low-income households are more likely to hold mortgage and informal loans or to be over-indebted in highly indebted countries.Originality/valueFirst, this paper extends the knowledge of the relationship between social interactions and borrowing behaviour by considering not only the intensity and diversity of the social activities in which the individual participates, but also the different nature of these activities. Second, it proposes that social interactions may play a passive role on borrowing decision, suggesting that household's behaviour might be passively affected by the density of borrowers surrounding it. To the best of our knowledge, there has not been any attempt to test this issue regarding household borrowing decisions. Third, unlike the few empirical papers on the topic, the paper also analyses previous issues by distinguishing between different types of debts; a distinction that revels the different role played by social interactions.

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“…For instance, studying identical twins, Cronqvist and Siegel (2015) found that the decision how much to save out of one's current income can be traced to shared genes. Moreover, Barth, Papageorge, and Thom (2020) Two illustrative papers promoting explanations for portfolio heterogeneity based on institutional variation are Christelis, Georgarakos, and Haliassos (2013) and Christelis, Ehrmann, and Georgarakos (2017). Focusing on the portfolios of older households in the United States and selected European countries, they apply a counterfactual method to investigate cross-country variation in the amount and types of assets and liabilities households chose to accumulate during their lifetimes.…”

Section: Theories Of Portfolio Heterogeneitymentioning

confidence: 99%

Culture and Portfolios: Trust, Precautionary Savings and Home Ownership

Fleck

Monninger

2020

SSRN Journal

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This paper shows that individual beliefs on the effectiveness of formal and informal sources of risk sharing determine financial precautionary behavior. We present empirical evidence demonstrating that higher trust in public insurance systems reduces net liquid wealth while higher trust in communal insurance increases it. This dichotomy is consistent with theories on access to private risk sharing networks. Moreover, we find that both types of trust associate positively with the probability to take on financial risk for the purpose of becoming a homeowner and the related loan-to-value ratio. Our findings are robust across a wide range of econometric controls and specifications.

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Exploring Differences in Household Debt across the United States and Euro Area Countries

Cited by 15 publications

References 35 publications

Intertemporal Consumption and Debt Aversion: A Replication and Extension

Intertemporal Consumption and Debt Aversion: A Replication and Extension

Do social interactions matter for borrowing behaviour of the Europeans aged 50+?

Culture and Portfolios: Trust, Precautionary Savings and Home Ownership

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