Household Debt and Social Interactions
By Dimitris Georgarakos, Michael Haliassos, Giacomo Pasini. Social Science Research Network, 2012
179 citations recorded by the source corpus.
Debt-induced crises, including the subprime crisis, are usually attributed exclusively to supply-side factors. We examine the role of social influences on debt culture, emanating from perceived average income of peers. Utilizing unique information from a household survey, representative of the Dutch population, that circumvents the issue of defining the social circle, we consider collateralized, consumer, and informal loans. We find robust social effects on borrowing - especially among those who consider themselves poorer than their peers - and on indebtedness, suggesting a link to financial distress. We employ a number of approaches to rule out spurious associations and to handle correlated effects.
View Paper: https://www.semanticscholar.org/paper/a840ff6bead36749331394c693afd12310423be3
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Citations in the corpus
- Household Debt: Facts, Puzzles, Theories, and Policies (2015, background): “Others have suggested that rising inequality leads to increased loan demand through social preferences (reference points and/or peer effects); I am not aware of any papers that have attempted to fully work out the demand side, but Georgarakos et al (2014) is an interesting starting point.”
- Peer effects in risk taking: Envy or conformity? (2015, background): “Peers also affect credit decisions (e.g., Banerjee et al. 2013; Georgarakos et al. 2012), savings decisions (e.”
- Debt literacy, financial experiences, and overindebtedness* (2015, background): “For example, are people who perceive themselves poorer than their social circles more likely to borrow to keep up with peers, and can these types of borrowing contribute to potential financial distress? These are the questions that a recent paper investigates (Georgarakos et al., 2014).”