Changing Circumstances in Late Life and the Relationship to Household Debt

The study is motivated by the rise of household debt in recent decades in most economically developed societies. Students of consumer society have noted the increasing importance of material comfort and the growing use of credit among people in late life. Yet, for those living on fixed income any change in the economic environment or in one’s health can dramatically disrupt their economic wellbeing. The theoretical framework on household debt in late life builds on two concepts central to social stratification: consumption and risk. With regard the former we focus on risks associated with changing circumstances such as retirement and illness. As to the latter, we argue that consumer culture and its institutional structures are an important driving force behind growing household debt.

Based on the above theoretical framework, the paper addresses three issues: the relationship between debt and changes in life circumstances (especially as related to health status and labor market activity); the association between household debt and the subjective experience of economic hardship; and cross-county variations in the relationship between household dynamics and indebtedness. The analysis is carried out using the first and the fourth waves of the Survey of Health Aging and Retirement in Europe (SHARE).  The panel structure makes it possible to study changes in late life (marital status, labor market, and health) and their relationship to household debt in 13 European countries and in Israel. Preliminary findings reveal that household debt is widespread even in advanced ages; it is not limited to households that are asset poor; but it is systematically related to need as determined by changes in health and marital status. Large country differences exist in the magnitude of household debt. We also find complex effects of country context on household level relationships.