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Mapping fragility: Functions of wealth and social classes in U.S. household finance

Orsola Costantini and Carlo D'Ippoliti
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Orsola Costantini: United Nations Conference on Trade and Development

No inetwp215, Working Papers Series from Institute for New Economic Thinking

Abstract: Which households are more exposed to financial risk and to what extent is their debt systemically relevant? To provide an answer, we advance a new classification of the population, adapted from Fessler and Schurz (2017), based on the type of wealth families own and their sources of income. Then, we investigate data from eleven waves of the Survey of Consumer Finances (SCF), a triennial survey run by the U.S. Federal Reserve, to explore the association of different debt configurations and motives to get into debt with our class distinctions. Our new approach allows us to assess competing hypotheses about debt and financial vulnerability that have so far been analyzed separately in disconnected strands of literature. The results of our study reinforce and qualify the controversial hypothesis that relative poverty and inequality of income and access to services have been important factors explaining household indebtedness and its relationship with economic growth over time.

Keywords: Household debt; financial fragility; inequality; Veblen; survey of consumer finances (search for similar items in EconPapers)
JEL-codes: D14 D31 E21 G51 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2023-12-06
New Economics Papers: this item is included in nep-ban
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https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4704173 First version, 2023 (text/html)

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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:inetwp215

DOI: 10.36687/inetwp215

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