Abstract

http://ssrn.com/abstract=2014222
 


 



Household Debt and Social Interactions


Dimitris Georgarakos


Goethe University Frankfurt; Center for Financial Studies (CFS); University of Leicester

Michael Haliassos


Goethe University Frankfurt - Faculty of Economics and Business Administration; Goethe University Frankfurt - Center for Financial Studies (CFS); Goethe University Frankfurt - Research Center SAFE; Goethe University Frankfurt - House of Finance; CEPR

Giacomo Pasini


Ca Foscari University of Venice - Department of Economics; Netspar; University of Venice - SSAV

December 6, 2013


Abstract:     
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.

Number of Pages in PDF File: 48

Keywords: Household finance, household debt, social interactions, mortgages, consumer credit, informal loans

JEL Classification: G11, E21

working papers series





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Date posted: March 2, 2012 ; Last revised: December 9, 2013

Suggested Citation

Georgarakos, Dimitris and Haliassos, Michael and Pasini, Giacomo, Household Debt and Social Interactions (December 6, 2013). Available at SSRN: http://ssrn.com/abstract=2014222 or http://dx.doi.org/10.2139/ssrn.2014222

Contact Information

Dimitris Georgarakos
Goethe University Frankfurt ( email )
House of Finance
Grueneburgplatz 1, PF H32
Frankfurt am Main, DE Hessen 60323
Germany
+49 69 798 34033 (Phone)
Center for Financial Studies (CFS)
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
University of Leicester
Department of Economics
Leicester LE1 7RH, LE1 7RH
United Kingdom
Michael Haliassos (Contact Author)
Goethe University Frankfurt - Faculty of Economics and Business Administration ( email )
Grueneburgplatz 1
Frankfurt am Main, D-60323
Germany
Goethe University Frankfurt - Center for Financial Studies (CFS)
Grueneburgplatz 1
Frankfurt am Main, 60323
Germany
HOME PAGE: http://www.ifk-cfs.de
Goethe University Frankfurt - Research Center SAFE ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
Goethe University Frankfurt - House of Finance
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
CEPR
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Giacomo Pasini
Ca Foscari University of Venice - Department of Economics ( email )
Cannaregio 873
Venice, 30121
Italy
+39 041 234 9171 (Phone)
+39 041 2349176 (Fax)
HOME PAGE: http://venus.unive.it/pasinigi

Netspar ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
HOME PAGE: http://www.netspar.nl/people/researchfellows/pasini/
University of Venice - SSAV ( email )
Venice
Italy
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