Household Over-Indebtedness: Definition and Measurement with Italian Data
28 Pages Posted: 3 Apr 2013
Date Written: February 22, 2013
The last decade has seen significant increases in consumer indebtedness in western countries, causing concern about its economic and social impact. In particular, over-indebtedness is attracting attention from national and international authorities because of its potential effect on both the sustainability of households' indebtedness and the stability of the financial system. From a social point of view, the excessive accumulation of debts accompanied by households' liquidity constraints causes a deterioration in households' social and economic well-being, thus leading in the long term to social exclusion and poverty. The aim of this paper is to present and analyze the main measures of over-indebtedness used in the literature. In particular, the paper uses data from the Italian Survey of Household Income and Wealth to extend the existing knowledge about the possible ways of measuring economic difficulty and over-indebtedness. The traditional and the new measures of over-indebtedness are subsequently compared with the measures of poverty in order to disentangle the relationship between the two phenomena.
Keywords: household debts, over-indebtedness, poverty
JEL Classification: D12, D91, I32
Suggested Citation: Suggested Citation