Lawrence Berger "Household Debt and Children's Developmental Trajectories"

The economic crisis of 2008 called attention to the risks associated with rising household and consumer debt. Over the last forty years, inflation adjusted household debt has increased dramatically, and debt has become more difficult for American families to repay. The ability to borrow is a significant resource through which to invest in human capital, purchase goods and services, and smooth consumption. In some circumstances, however, repaying debt (or pressure to do so) may result in economic or other stress and, potentially, reduced consumption and wellbeing for both adults and children. Associations between debt and wellbeing are likely to vary by reasons for borrowing, (relative) magnitude of debt, and cost of debt (loan terms), as well as life course stage, socioeconomic status, and household characteristics. Yet, there has been limited rigorous research on whether particular types and amounts of household debt are associated with child wellbeing. We use data from the 1979 panel of the National Longitudinal Survey of Youth and Hierarchical Linear Models, which take advantage of both between- and within-individual variation, to estimate associations of amounts and types (home, education, auto, unsecured) of parental debt with child socioemotional wellbeing, net of a host of selection factors. Results suggest that unsecured debt is associated with increased child behavior problems, whereas this is not the case for other types of debt. # 4833