Attitudes Toward Debt and Debt Behavior

We combine survey data on debt attitudes with registry data on household balance sheets to shed light on the determinants of household debt. We introduce a simple and novel survey measure of attitude toward debt, asking respondents if they are uncomfortable with debt. We show that this measure is correlated with observed household debt levels, even after controlling for relevant socioeconomic variables; those who report being uncomfortable with debt have considerably lower debt levels. Being uncomfortable with debt is correlated between parents and their children, indicating intergenerational transmission of behavior and attitudes toward debt.