Attitudes Toward Debt and Debt Behavior

Abstract

We introduce a novel survey measure of attitude toward debt. Matching our survey results with panel data on Swedish household balance sheets from registry data, we show that our debt attitude measure helps explain individual variation in indebtedness as well as debt build-up and spending behavior in the period 2004–2007. As an explanatory variable, debt attitude compares well to a number of other determinants of debt, including education, risk-taking, and financial literacy. We also provide evidence that suggests that debt attitude is passed down along family lines and has a cultural element.

Keywords: Attitude Survey, Household borrowing decisions, Intergenerational transmission, personal finance, spending

JEL Classification: D14, D91, E21, G51