Consumer Credit in the Affluent Society

Abstract

A great deal has been written in the past decade or so about the affluence of American society, its increasingly high standard of living and the consumptionorientation of its citizens. One aspect of the affluent society, however, that has gone largely unnoticed by sociologists is the extent to which it rests upon the institution of consumer credit. It can truly be said that the affluent society is also a credit society. The attitudes of Americans toward debt have undergone a remarkable change within the lifetimes of many of us. Whereas not too long ago, debt was viewed as the mark of the imprudent or poverty-stricken man, today it is part of the American way of life. Consumer credit takes a number of different forms. By far the largest category, and the one we are most accustomed to, is mortgage debt. Outstanding mortgage debt has grown tremendously in the last few decades as government-backed lowinterest loans have made it possible for vast numbers of families to realize their great ambition of home ownership. From I950 to the second quarter of I968, nonfarm mortgage debt grew from $45 billion to $243.4 billion.1 Whereas forty-four per cent of American homes were mortgaged in I950, fifty-seven per cent were mortgaged in 1960, and the figure is undoubtedly much higher today.2 In all accountings of consumer debt by economists and government, mortgage debt is sharply differentiated from other kinds, partly because it is long-term and partly because the purchase of a house is seen as an investment rather than as purely consumption. The other kinds of consumer credit are referred to as personal debt or, somewhat confusingly, as consumer debt, the term now referring to debt other than mortgages. In this more narrow sense, consumer credit covers short-term noninstallment debt and somewhat longer-term installment debt. Noninstallment debt includes charge accounts, debts for professional services, and that new institution, the credit card. Of particular significance has been the rapid development of installment credit, the kind of credit for which the consumer pays a fee for the privilege of paying the