The Distribution of Household Debt in the United States, 1950-2022

Alina Bartscher (), Moritz Kuhn (), Moritz Schularick () and Ulrike Steins
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Alina Bartscher: Frankfurt School of Finance and Management
Moritz Kuhn: University of Mannheim = Universität Mannheim, CEPR - Center for Economic Policy Research, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics
Moritz Schularick: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, Kiel Institute for the World Economy - Kiel Institute for the World Economy, CEPR - Center for Economic Policy Research

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Abstract: Using new household-level data, we study the secular increase in U.S. household debt and its distribution since 1950. Most of the debt were mortgages, which initially grew because more households borrowed. Yet after 1980, debt mostly grew because households borrowed more. We uncover home equity extraction, concentrated in the white middle class, as the largest cause, strongly affecting intergenerational inequality and life-cycle debt profiles. Remarkably, the additional debt did not lower households' net worth because of rising house prices. We conclude that asset-price-based borrowing became an integral part of households' consumption-saving decisions, yet at the cost of higher financial fragility.

Keywords: Household debt; Home equity extraction; Inequality; Household portfolios; Financial fragility (search for similar items in EconPapers)
Date: 2025-07
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-05448445v1
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Published in Review of Economic Dynamics, 2025, Review of Economic Dynamics, 57, pp.101288. ⟨10.1016/j.red.2025.101288⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05448445

DOI: 10.1016/j.red.2025.101288

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