The Co-holding Puzzle: New Evidence from Transactional-Level Data

Using detailed and highly disaggregated data on household finances, we examine the tendency of consumers to “co-hold” savings and debt simultaneously. The disaggregated nature of the data allows us to calculate co-holding at daily frequency. We find that coholding is rare and mostly occurs in short spells within the month, but is a persistent behavior among a subset of consumers. For this group, we find evidence in support of explanations for co-holding based upon functional mental accounting in which agents hold spending and saving accounts, while we find less support for rational explanations.