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The distribution of household debt in the United States, 1950-2022

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  • Bartscher, Alina K.
  • Kuhn, Moritz
  • Schularick, Moritz
  • Steins, Ulrike I.

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' consumption-saving decisions, yet at the cost of higher financial fragility.

Suggested Citation

  • Bartscher, Alina K. & Kuhn, Moritz & Schularick, Moritz & Steins, Ulrike I., 2025. "The distribution of household debt in the United States, 1950-2022," Open Access Publications from Kiel Institute for the World Economy 318398, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkie:318398
    DOI: 10.1016/j.red.2025.101288
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    References listed on IDEAS

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    1. Henrik Yde Andersen & Søren Leth-Petersen, 2021. "Housing Wealth or Collateral: How Home Value Shocks Drive Home Equity Extraction and Spending," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 403-440.
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    4. Alina K. Bartscher & Moritz Kuhn & Moritz Schularick & Paul Wachtel, 2022. "Monetary Policy and Racial Inequality," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 53(1 (Spring), pages 1-63.
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    Keywords

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    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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