The role of consumer and mortgage debt for financial stress
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Connects with: @drentea2015 @dunn2016 @marshall2021
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loibl2022 - p. 117
stress process model
Note: theory
loibl2022 - p. 117
theoretical model of strength and vulnerability integration in the aging process
loibl2022 - p. 117
financial debt, by conceptualizing debt as ‘sustained exposure to highly arousing, inescapable negative situations’
loibl2022 - p. 117
The material domain of financial stress reflects difficulty paying monthly bills and difficulty accumulating sufficient savings for emergencies or retirement
loibl2022 - p. 117
The psychological domain of financial stress is related to individuals’ sense of mastery and coping abilities and, in turn, to increased feelings of hopelessness, frustration, and anxiety
loibl2022 - p. 117
Our first research objective is to investigate the association of the level of financial stress in the material and psychological domains with housing and non-housing debt, following suggestions in the stress process model literature.
loibl2022 - p. 117
Not all mortgage debt is the same, and thus, our second research objective is to examine whether financial stress in the material and psychological domains differ for the two broad types of mortgages, first and secondary mortgages
loibl2022 - p. 117
third research objective of this study is whether mortgage debt that is acquired before retirement age and carried into older age is more or less stressful than ‘new’ mortgage debt obtained after retirement age, testing the notion of sustained, inescapable economic burden (Charles, 2010).
loibl2022 - p. 118
We estimate separate regression models for two binary measures of financial stress, representing the material domain (‘billpaying difficulty’) and psychological domain (‘ongoing financial strain’) of financial stress, using random-effects logit regressions of adults age 62 and older.2
loibl2022 - p. 118
All regression specifications account for a rich set of socio-economic household and respondent characteristics
loibl2022 - p. 118
We employ the HRS, a well-regarded survey of American adults age 50 and older, with a response rate above 80%. Respondents are surveyed every two years with new birth cohorts added to the existing sample every three waves.
loibl2022 - p. 118
Bill-paying difficulty was inquired with the question, ‘How difficult is it for you to meet monthly payments on your bills?’
loibl2022 - p. 119
ngoing financial strain was inquired with the question, ‘Please read the list below and indicate whether or not any of these are current and ongoing problems that have lasted twelve months or longer. If the problem is happening to you, indicate how upsetting it has been’.
loibl2022 - p. 119
We include two measures to capture non-housing consumer debt; they are credit card debt and other non-housing consumer debt. Credit card debt is measured as the balance of credit card debt that was carried over from the prior month. In addition, we create another non-housing consumer debt measure by subtracting credit card debt from the consumer debt variable. Other non-housing consumer debt includes medical debts, loans from life insurance policies, and loans from relatives.
loibl2022 - p. 119
Mortgage debt on the primary residence consists of four types: first mortgages, HELOCs, second mortgages, and other mortgages. Some respondents in the HRS own a second home and hold a mortgage on their second home. Secondary residence mortgage balance is a total measure of all mortgages for the secondary residence. We use the one-wave lagged balance of each type of mortgage.
loibl2022 - p. 119
ousehold characteristics include the number of household members, location of residence (urban (reference group), suburban, rural area), and nine regional indicators
loibl2022 - p. 119
Financial characteristics include the financial respondents and their spouses or partners’ income from Social Security retirement and disability income, earnings, and other income.
loibl2022 - p. 119
Assets include household-level net cash assets (including cash in checking accounts and Certificates of Deposit), net investment assets (including assets held in Individual Retirement Arrangements, stocks, bonds, and trust accounts), and net other assets (including other savings, non-housing real estate, transportation, and business assets).
loibl2022 - p. 119
We account for respondents’ social support network with a dummy variable that indicates friends or relatives to provide help if needed.
loibl2022 - p. 126
1.641 1.925
loibl2022 - p. 126
1.123 1.199
loibl2022 - p. 126
1.045 1.055
loibl2022 - p. 126
1.069
loibl2022 - p. 126
1.139 1.145
loibl2022 - p. 126
1.280 1.309
loibl2022 - p. 126
0.922 0.952
loibl2022 - p. 126
0.963 0.965
loibl2022 - p. 126
0.991 0.992
loibl2022 - p. 126
0.988 0.984
loibl2022 - p. 126
0.924
loibl2022 - p. 126
0.934
loibl2022 - p. 126
Number household 1.138 1.164
loibl2022 - p. 126
1.137 1.164
loibl2022 - p. 126
0.794
loibl2022 - p. 126
0.948 0.952
loibl2022 - p. 126
0.513
loibl2022 - p. 126
1.390
loibl2022 - p. 126
0.686
loibl2022 - p. 126
1.234
loibl2022 - p. 126
1.287 1.175
loibl2022 - p. 127
0.759 0.751
loibl2022 - p. 127
0.751
loibl2022 - p. 127
0.895 0.893
loibl2022 - p. 127
1.529
loibl2022 - p. 127
1.355
loibl2022 - p. 127
0.759 1.366
loibl2022 - p. 127
1.692