Template-Type: ReDIF-Paper 1.0
Title: The Distribution of Household Debt in the United States, 1950-2022
Author-Name: Alina K. Bartscher
Author-Email: a.bartscher@fs.de
Author-Name: Moritz Kuhn
Author-Email: mokuhn@uni-mannheim.de
Author-Name: Moritz Schularick
Author-Email: moritz.schularick@sciencespo.fr
Author-Name: Ulrike I. Steins
Author-Email: ulrike.steins@gmx.de

Classification-JEL: G51, E21, E44, D14, D31
Keywords: household debt, home equity extraction, inequality, household portfolios, financial fragility

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’ consumptionsaving
decisions, yet at the cost of higher financial fragility.

Note: 
Length: 87
Creation-Date: 2025-01
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp634
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2025_634