Household debt in different age cohorts: A multilevel study (original) (raw)
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Journal of Reviews on Global Economics, 2018
This study focuses on investigating the relationships between different socioeconomic and demographic characteristics and households’ debt decision and demand. We used six survey rounds of data from Pakistan household integrated expenditure survey (HIES) 2001 to 2014. HIES is a nationally representative data collected by Pakistan Bureau of Statistics. Multilevel models were used to investigate the relationship in which the data on households was nested in primary sampling units (PSUs) and PSUs were nested in provinces. The decision of taking household debt varies 22% at PSU level and 18% at provincial level due to unobserved variables. We found that households having higher financial assets, higher income and larger household sizes tend to have a higher percentage of debt. The amount of debt also increases with education and age. In the case of demand for debt, the variation is 12% at the provincial level. Literature studying household debt decision in Pakistan often ignore the geographical differences (region/province specific studies). Considering socioeconomic characteristics habituating the usage of credit is of countless importance in guiding policy design and interventions that aim to improve financial inclusion
Household debt in midlife and old age: A multinational study
This article examines the prevalence of household debt in middle and old age, in the context of rising consumption, the weakening welfare safety net, and the 'democratization' of credit. We aim to address theoretical propositions concerning household correlates of mortgage and financial debt, as well as the relationship between the two types of debt. We utilize data gathered on populations, aged 50 years and older, in 15 countries that participated in the Survey of Health, Ageing, and Retirement in Europe (SHARE) project. We find considerable levels of mortgage and financial debt in advanced stages of life, as well as significant differences within and between countries. Controlling for country variation as well as individual and household attributes, we find a positive relationship between the size of mortgage debt and financial debt across most countries. We test alternative explanations for this relationship and discuss the implications of our findings in the broader context of the risks faced by older cohorts in consumer societies with shrinking welfare expenditure.
Debt and Debt Management Among Older Adults
2013
Of particular interest in the present economic environment is whether access to credit is changing peoples’ indebtedness over time, particularly as they approach retirement. This project analyzes older individuals’ debt, debt management practices, and financial fragility using data from the Health and Retirement Study (HRS) and the National Financial Capability Study (NFCS). Specifically, we examine three different cohorts (individuals age 56–61) in different time periods, 1992, 2002 and 2008, in the HRS to evaluate cross-cohort changes in debt over time. We also draw on recent data from the National Financial Capability Study (NFCS) which provides detailed information on how families manage their debt. Our goal is to assess how wealth and debt among older persons has evolved over time, along with the potential consequences for retirement security. We find that more recent cohorts have taken on more debt and face more financial insecurity, mostly due to having purchased more expensi...
Patterns and Predictors of Debt: A Panel Study, 1985-2008
Journal of Sociology and Social Welfare, 2012
Relying on panel data from the National Longitudinal Survey of Youth (NLSY79), this study finds that about half the study sample (N = 5,304) never experienced annual debt between 1985 and 2008, that the vast majority of those who incurred annual debt were short-term (1 year) or intermittent debtors (2-4 years), that the proportion of the study sample in debt for the most part declined over time, but also that the level of debt increased. Multinomial regression results indicated that health status and level of changes in income are robust predictors of debt in general, that age and race/ethnicity are robust predictors of short-term and intermittent debt, that locus of control, family structure during adolescence, SES, work effort, and marital status are robust predictors of intermittent and chronic debt, and that self-esteem, gender, SES, and work effort are robust predictors of chronic debt. Findings challenge blanket contentions that a culture of debt characterizes individuals and families in the U.S and they present a more nuanced portrait of debtors than the stereotype as young and single.
Factors influencing young adults' debt in Malaysia
Journal of Business & Retail Management Research
This study explores factors affecting debt level among young adults in Malaysia. Previous studies have linked material values, money management skills, and economic factors to credit card debt and student debt, but this study extends the previous research by investigating various forms of consumers' debt in an emerging market where vulnerable youths are frequently bombarded with materialistic media messages that trigger their spending behaviour. In particular, variables such as pursuits of materialistic attitudes, money management attributes, and income level are examined in this study to see whether they are predictors of youth debt in Malaysia. A self-administered survey on 629 respondents centered around northern part of Malaysia was conducted based on convenience and judgmental sampling techniques. The findings suggest that money management skills and income level significantly influence the debt level of Malaysian young adults. Interestingly, materialism variable is insignificant, implying that young Malaysians represented in this sample do not possess materialistic attitude that lead to indebtness. The findings provide insights to the policy maker and the government to inculcate awareness of basic money management skills to ensure that the younger generation does not fall into the state of excessive debt which could lead to financial insolvency.
Understanding Debt in the Older Population
SSRN Electronic Journal, 2020
Poor financial capability can erode well-being in later life. To explore debt and debt management among older Americans, age 51-61, we designed and analyzed a new module in the 2018 Health and Retirement Study along with information from the 2018 National Financial Capability Study. Even though this group should be at the peak of their retirement savings, it nevertheless carries debt due to student loans and unpaid medical bills; having children also contributes to carrying debt close to retirement. By contrast, the financially literate have more positive financial perceptions and behaviors. Specifically, being able to answer one additional financial literacy question correctly is associated with a higher probability of reporting an above average credit record and planning for retirement. Higher financial literacy is also linked to being less likely to carry excessive debt, being contacted by debt collectors, and carrying medical debt or student loans, even after accounting for a large range of demographics and other characteristics. Evidently, financial knowledge can help limit debt exposure at older ages.
The Changing Face of Debt and Financial Fragility at Older Ages
AEA Papers and Proceedings
We investigate changes in older individuals' financial fragility as they stand on the verge of retirement. Using data from the Health and Retirement Study (HRS), we compare how debt has changed for successive cohorts of people age 56–61. Our analysis shows that recent older Americans close to retirement hold more debt, and hence face greater financial insecurity, than earlier generations. This is primarily due to having bought more expensive homes with smaller down payments. We discuss possible policy implications.
Older Adult Debt and Financial Frailty
SSRN Electronic Journal, 2000
Of particular interest in the present economic environment is whether access to credit is changing peoples' indebtedness over time, particularly as they approach retirement. This project analyzes older individuals' debt, debt management practices, and financial fragility using data from the Health and Retirement Study (HRS) and the National Financial Capability Study (NFCS). Specifically, we examine three different cohorts (individuals age 56-61) in different time periods, 1992, 2002 and 2008, in the HRS to evaluate cross-cohort changes in debt over time. We also draw on recent data from the National Financial Capability Study (NFCS) which provides detailed information on how families manage their debt. Our goal is to assess how wealth and debt among older persons has evolved over time, along with the potential consequences for retirement security. We find that more recent cohorts have taken on more debt and face more financial insecurity, mostly due to having purchased more expensive homes with smaller down payments. In addition, Baby Boomers are more likely to have engaged in expensive borrowing practices. Factors associated with better debt outcomes include having higher income, more education, and greater financial literacy; those associated with financial fragility include having more children and experiencing unexpected large income declines. Thus, shocks do play a role in the accumulation of debt close to retirement. But it is not enough to have resources, people also need the capacity to manage those resources if they are to stay out of debt as they head into retirement.
Understanding Debt at Older Ages and Its Implications for Retirement Well-being
2018
We use data from the 2015 National Financial Capability Study to analyze debt close to retirement. We show people carry many types of debt late in their lifetimes, and these types of debt are differently linked to measures of financial distress such as having too much debt or being unable to face a financial shock. Accordingly, it is important to be able to disaggregate debt to investigate reasons why individuals carry debt close to retirement. We show that lack of financial literacy, lack of information, and behavioral biases all help explain the prevalence of debt later in life. Our evidence indicates that debt at older ages can may negatively influence retirement wellbeing. Disciplines Economics Comments This project received funding from the TIAA Institute and Wharton School’s Pension Research Council/ Boettner Center. This working paper is available at ScholarlyCommons: https://repository.upenn.edu/prc\_papers/12 Understanding Debt at Older Ages and Its Implications for Retireme...
A review of literature on factors affecting financial behaviour (debt) of emerging adults
2023
The objective of this paper is to evaluate and critically examine literature on factors that affect emerging adults’ financial behaviours especially as regards debt management. Using Google Scholar, Scimago and the International Society for Research on Impulsivity, we performed an electronic search using selected keywords to identify key papers published in English from 2008 to 2020. We further conducted an evaluation of identified articles which were found to be fit for review. The findings of this review established that even though there was an upsurge in the quantity and quality of research work in the area of factors that affect young adults’ financial behaviours, nearly all of this work was conducted in developed countries. The lack of this kind of research in the developing world was worsened by the financial situation in these countries at individual, corporate and Government levels. Due to limited resources and expertise, appropriate interventions were lacking to remedy the situation. Further, it can asserted that the process of administering such research activities on a large scale and targeted at the right audience – emerging adults, and the publication and dissemination of research results thereof, significantly impacts on positive change for emerging adults’ financial behaviours and ultimately assists with grooming future leaders who are financially aware and are equipped with key financial management skills. Major among these is the impulsivity control mechanism that comes with experience of participating in a research on impulsivity or exposure to results dissemination on the same. Firm statements can be made that link sound research in the area of emerging adults’ financial behaviours, especially for longitudinal studies, with vital results which are key for design of intervention strategies. This work further highlights the issue of poor statistics at macro level for most developing countries (Morten Jerven, 2013). From this finding, one can conclude that inadequate resources at national level leads to research and statistics being least prioritized. This then compounds the problem, as it leads to notable knowledge gaps hence resulting in inappropriate policy interventions for building a financially aware crop of leaders.