Acceptance of debt and risk differs sharply by socioeconomic class

Evidence

Our attitudinal measures provide evidence that American households became willing to take on more financial risk over time and that they became more accepting of debt as a tool to support a given lifestyle against income shocks. But, these shifts also imply quite different social processes for different ends of the SES distribution. The top of the SES distribution, which has seen the most income gains from 1998 to 2007, has become much more accepting … The bottom of the SES distribution rarely takes financial risks but has always been willing to find borrowing acceptable to keep a lifestyle in place. Those in the middle and upper middle classes have gotten used to higher levels of risk and reward and are more comfortable with going into debt to support their lifestyles. This offers overall support for Hypothesis 3d, which argues that if there is a new finance culture, it is most prevalent in the upper middle and top parts of the SES distribution. — Neil Fligstein & Adam Goldstein, The Emergence of a Finance Culture in…, 120

Categorization

• XREF: Connects to the financialization-of-households literature and the author’s reading purpose on everyday financialization — different social classes take on financialization in markedly different ways. — connects to: Inflation acts as a class-specific tax benefiting debtors over creditors — Mark Blyth, Austerity: The History of a Dangerous…, 46; Financial risk-taking emerges in middle classes as a response to top-end inequality. — Neil Fligstein & Adam Goldstein, The Emergence of a Finance Culture in…, 3; Households signal financialization through risk-taking, relaxed debt attitudes, and speculative strategies — Neil Fligstein & Adam Goldstein, The Emergence of a Finance Culture in…, 48 (+4 more)
• ADDENDUM: Relevant to a broader argument about how economic norms are lived differently across class — fits the paper’s financialization-of-everyday-life theme.

Related

• Financialized risk-taking is concentrated in the upper middle class, not spread across all earners (similarity 0.92)
• Financial risk-taking emerges in middle classes as a response to top-end inequality. (similarity 0.91)
• Upper-middle-class risk-taking is a defensive response to falling behind the top 2% (similarity 0.88)
• Financialization of households is stratified by class, not uniform (similarity 0.88)
• The finance culture took root in the upper-middle class. (similarity 0.86)
• Households signal financialization through risk-taking, relaxed debt attitudes, and speculative strategies (similarity 0.83)
• Most US households stayed averse to financial risk even during the 1990s boom (similarity 0.83)
• Upper-middle households increasingly treated homes as leverage assets. (similarity 0.80)
• Households in social democracies face pressure to adopt finance culture too. (similarity 0.80)
• Debt has shifted from moral stigma to a compulsory first adult economic experience (similarity 0.80)
• Households borrowed heavily to preserve their lifestyles amid economic insecurity. (similarity 0.79)
• Top-end wealth concentration intensifies pressure on lower households to maintain relative lifestyles. (similarity 0.79)
• Citizens and governments alike borrowed heavily, embedding finance in everyday life. (similarity 0.78)

Broader Connections

• Upper-middle-class risk-taking is a defensive response to falling behind the top 2% #exemplifies (0.85) — Neil Fligstein & Adam Goldstein, The Emergence of a Finance Culture in…, 145
• Debt has shifted from moral stigma to a compulsory first adult economic experience #expands (0.80) — Max Haiven, Cultures of Financialization, 196