Household Debt: Facts, Puzzles, Theories, and Policies
Borrowing decisions affect most households, with large stakes and implications for subfields as varied as macroeconomics and industrial organization. I review theoretical and empirical work on household debt: its prevalence, level, growth, and composition, as well as various measures of consumer choice and market (in)efficiency, elasticities, and prices, including new evidence on how borrowing heterogeneity affects the distribution of the opportunity cost of consumption. I also discuss opportunities and challenges in policy evaluation. A key takeaway is that puzzles outstrip stylized facts, and I highlight numerous avenues for further research.
Thanks to Ayushi Narayan for excellent research assistance; to Neil Bhutta, David Laibson, Jialan Wang, and audiences at the Consumer Financial Protection Bureau and the Chicago Benefit-Cost Conference for helpful comments; and to many co-authors (especially Dean Karlan and Victor Stango) for shaping and sharpening my thinking over the years. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Jonathan Zinman, 2015. "Household Debt: Facts, Puzzles, Theories, and Policies," Annual Review of Economics, vol 7(1), pages 251-276. citation courtesy of