Exploratory Study of Comparison Income and Individual Debt Using British Household Panel Survey

Ourega-Zoé Ejebu
Additional contact information
Ourega-Zoé Ejebu: University of Aberdeen

Review of Economic Analysis, 2018, vol. 10, issue 2, 181-202

Abstract: "The famous saying “keeping up with the Joneses” is a generational behaviour that is still deeply interwoven in the behavioural fabric of our modern-day society. This paper aims to address and contribute to the existing literature by investigating the determinants of individual non-mortgage debt, focusing on the role of comparison income. It also seeks to overcome certain empirical shortcomings by applying Tobit, fixed effects, and Tobit fixed effects regression models to a UK dataset. The study is motivated by previous research, which suggested the aspiration of borrowers is influential in the debt-decision process. Previous studies did not use empirical methods or UK data, however. Comparison income (the measure of the borrowers’ aspiration) is derived from the Mincer earnings equation. Tobit regression is applied in the cross-section analysis and is pertinent considering the censored nature of the dependent variable. In the panel analysis, fixed effects and Tobit fixed effects are used to control for unobserved attributes of sampled individuals that may affect demand for debt. Comparison income and non-mortgage debt as well as other economic and demographic variables are positively and significantly associated. The relationship between comparison income and non-mortgage debt suggests the latter may be incurred for status-maintenance purposes."

Keywords: non-mortgage debt; comparison income; status maintenance; consumer behaviour; Tobit; fixed effects; panel data (search for similar items in EconPapers)
JEL-codes: D14 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
http://rofea.org/index.php?journal=journal&page=article&op=view&path%5B%5D=407 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ren:journl:v:10:y:2018:i:2:p:181-202

Access Statistics for this article

Review of Economic Analysis is currently edited by Dr. Jerzy (Jurek) Konieczny

More articles in Review of Economic Analysis from Digital Initiatives at the University of Waterloo Library
Bibliographic data for series maintained by Dr. Jerzy (Jurek) Konieczny ().