Unsecured Debt, Risk, and Inequality in the United States

• In Event: 1570 - Household Finance and Inequality

Abstract

In an increasingly financialized economy with rising inequality and spreading insecurity, Americans turn to unsecured debt to manage shortfalls in income and make investments in social mobility. Widely available and normalized, debt can be appealing as a private safety net in the US context of an anemic welfare state, but risky for those who carry persistent debt over time. We test the effects of growing financialization and economic insecurity on household finances by asking whether carrying debt became riskier over time using data from the Survey of Consumer Finances. We find that persistent debtors became ever more burdened in the 2000s compared to the 1990s, with lower-income and racial minority debtors experiencing the greatest burdens. We argue that an oft-overlooked commonality across privatized coping strategies is the wide array of financial actors prepared to monetize insecurity in a society that provides few other safety nets.

Authors

• Rachel E. Dwyer, Ohio State University

• Michael David Nau, Ohio State University

• Elizabeth Martin, Ohio State University