Work

The distribution of household debt in the United States, 1950-2022

Year: 2025

Type: article

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.

Source: Review of Economic Dynamics

DOI: 10.1016/j.red.2025.101288

Authors: Alina K. Bartscher, Moritz Kuhn, Moritz Schularick, Ulrike I. Steins

Institutions: Frankfurt School of Finance & Management, University of Mannheim, IZA - Institute of Labor Economics, Kiel Institute for the World Economy, Institut d'Etudes Politiques de Paris

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Reduced inequalities

Open Access status: hybrid

Estimated APC paid: $3,320