Working Paper: NBER ID: w20496
Authors: Jonathan Zinman
Abstract: 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.
Keywords: household debt; consumer credit; borrowing behavior; credit markets; financial policy
JEL Codes: D03; D14; D18; D83; D91; E21; E32; G01; G02; G11; G21; G23; G28; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| household borrowing decisions (G51) | opportunity cost of consumption (D11) |
| high debt levels (F34) | inefficiencies in consumer choice (D11) |
| consumer behavior (D19) | market inefficiencies (G14) |
| consumer credit markets (G21) | inefficient allocations (D61) |
| market power and regulatory conditions (L43) | credit supply (E51) |
| overborrowing (H74) | inefficiencies in consumer choice (D11) |