6533b860fe1ef96bd12c3a5b

RESEARCH PRODUCT

Household optimism and overborrowing

Hanna PutkuriAri Hyytinen

subject

Economics and EconometricsCoping (psychology)Actuarial scienceta511ylivelkaantuminenmedia_common.quotation_subject05 social sciencestaloudelliset ennusteetPessimismborrowingOptimismAccountingDebt0502 economics and businessvelkaantuminenEconomicsforecast errors050207 economicslainatoverindebtednessFinance050205 econometrics media_common

description

We use Finnish household-level data from 1994 to 2013 to measure how often and what kind of forecast errors households make and how the errors are linked to the households' borrowing behavior and overindebtedness. We find that those households that make the largest optimistic forecast errors have greater debt-to-income ratios. They also are more likely to report that they suffer from excessive debt loads and have problems in coping with their bills. There are no such systematic effects for the households that make pessimistic forecast errors. peerReviewed

yearjournalcountryeditionlanguage
2018-01-22Journal of Money, Credit and Banking
10.1111/jmcb.12453https://doi.org/10.1111/jmcb.12453