Abstract
This paper examines the influence of social interaction on household debt with using the data from the Survey of Health, Ageing and Retirement in Europe. I investigate whether sociability (participation in social activities like charity work, sport club and educational course) is related with the tendency of holding debt and the amount of debt held. For my total sample consisting of thirteen European countries, I find that sociability has sizeable positive effects on both mortgage debt and non-mortgage debt. It shows that sociable households are more likely to borrow and have greater amounts conditional on borrowing compared to the others. Nevertheless, my country-level findings present a considerable variation across countries in their social effects on debt. Keywords: Household Finance, Social Interaction, Household Debt, European Debt Crisis
Highlights
This paper examines the influence of social interaction on household debt with using the data from the Survey of Health, Ageing and Retirement in Europe
I examine the effect of social interaction on household debt by estimating a number of probit and tobit models, in which dependent variables are the decision of holding debt and the amount of debt held, respectively
I have examined the influence of social interaction on the tendency to have debt and on the amount of debt conditional on having such debt, with using the data from thirteen European countries which was collected in the second wave of SHARE
Summary
This paper examines the influence of social interaction on household debt with using the data from the Survey of Health, Ageing and Retirement in Europe. For my total sample consisting of thirteen European countries, I find that sociability has sizeable positive effects on both mortgage debt and non-mortgage debt. It shows that sociable households are more likely to borrow and have greater amounts conditional on borrowing compared to the others. For the first time in the literature, I examine social effect on household debt in an international dimension with the data from thirteen European countries
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