IDEAS home Printed from https://ideas.repec.org/a/kap/jfamec/v42y2021i4d10.1007_s10834-020-09731-7.html
   My bibliography  Save this article

Credit Card Debt and the Provision of Financial Support to Kin in the US

Author

Listed:
  • Maude Pugliese

    (Institut National de La Recherche Scientifique)

  • Céline Le Bourdais

    (McGill University)

  • Shelley Clark

    (McGill University)

Abstract

Credit card debt stands at over $1 trillion in the US and grows continuously. Scholars have argued that high (and growing) levels of credit card debt are attributable in part to rising economic vulnerabilities, combined with a thinning public safety net, credit cards being increasingly employed to make ends meet in this context. This paper extends this line of work by stressing that individuals and households do not rely on their credit cards only to mitigate their own financial hardships, but also those experienced by their non-coresidential kin members. More specifically, building on the notion that kin networks can constitute a source of negative social capital, we argue that individuals often accumulate credit card debt as they attempt to provide monetary assistance to their relatives in need. We also show that this effect is particularly strong in lower-income groups and in African American communities, in which need levels are especially high. Based on random and fixed effects analyses of data from the Panel Study of Income Dynamics, these insights extend scholarship on both kin networks of support and the sources of credit card debt.

Suggested Citation

  • Maude Pugliese & Céline Le Bourdais & Shelley Clark, 2021. "Credit Card Debt and the Provision of Financial Support to Kin in the US," Journal of Family and Economic Issues, Springer, vol. 42(4), pages 616-632, December.
    • Handle: RePEc:kap:jfamec:v:42:y:2021:i:4:d:10.1007_s10834-020-09731-7
    DOI: 10.1007/s10834-020-09731-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10834-020-09731-7
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10834-020-09731-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lusardi, Annamaria & Tufano, Peter, 2015. "Debt literacy, financial experiences, and overindebtedness," Journal of Pension Economics and Finance, Cambridge University Press, vol. 14(4), pages 332-368, October.
    2. Pamela Jakiela & Owen Ozier, 2016. "Does Africa Need a Rotten Kin Theorem? Experimental Evidence from Village Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 231-268.
    3. Stephan Meier & Charles Sprenger, 2010. "Present-Biased Preferences and Credit Card Borrowing," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 193-210, January.
    4. repec:bla:econom:v:48:y:1981:i:189:p:1-15 is not listed on IDEAS
    5. Diann Moorman & Steven Garasky, 2008. "Consumer Debt Repayment Behavior as a Precursor to Bankruptcy," Journal of Family and Economic Issues, Springer, vol. 29(2), pages 219-233, June.
    6. Deirdre Drake & Justine Dandy & Jennifer M. I. Loh & David Preece, 2018. "Should Parents Financially Support their Adult Children? Normative Views in Australia," Journal of Family and Economic Issues, Springer, vol. 39(2), pages 348-359, June.
    7. Song Han & Benjamin J. Keys & Geng Li, 2018. "Unsecured Credit Supply, Credit Cycles, and Regulation," The Review of Financial Studies, Society for Financial Studies, vol. 31(3), pages 1184-1217.
    8. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 151-182, July.
    9. N. Chiteji & Darrick Hamilton, 2002. "Family connections and the black-white wealth gap among middle-class families," The Review of Black Political Economy, Springer;National Economic Association, vol. 30(1), pages 9-28, June.
    10. Emily E. Wiemers & Judith A. Seltzer & Robert F. Schoeni & V. Joseph Hotz & Suzanne M. Bianchi, 2019. "Stepfamily Structure and Transfers Between Generations in U.S. Families," Demography, Springer;Population Association of America (PAA), vol. 56(1), pages 229-260, February.
    11. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-546, June.
    12. Pascaline Dupas & Jonathan Robinson, 2013. "Why Don't the Poor Save More? Evidence from Health Savings Experiments," American Economic Review, American Economic Association, vol. 103(4), pages 1138-1171, June.
    13. Begoña Gutiérrez-Nieto & Carlos Serrano-Cinca & Beatriz Cuéllar-Fernández & Yolanda Fuertes-Callén, 2017. "The Poverty Penalty and Microcredit," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(2), pages 455-475, September.
    14. Katrina M Walsemann & Jennifer A Ailshire, 2017. "Student Debt Spans Generations: Characteristics of Parents Who Borrow to Pay for Their Children’s College Education," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 72(6), pages 1084-1089.
    15. Michelle Maroto, 2019. "Sharing or Limiting the Wealth? Coresidence, Parental Support, and Wealth Outcomes in Canada," Journal of Family and Economic Issues, Springer, vol. 40(1), pages 102-116, March.
    16. Edward Wolff, 2013. "The Asset Price Meltdown, Rising Leverage, and the Wealth of the Middle Class," Journal of Economic Issues, Taylor & Francis Journals, vol. 47(2), pages 333-342.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chih-Hsiung Chang, 2022. "Information Asymmetry and Card Debt Crisis in Taiwan," Bulletin of Applied Economics, Risk Market Journals, vol. 9(2), pages 123-145.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Colin Campbell & Maude Pugliese, 2022. "Credit Cards and the Receipt of Financial Assistance from Friends and Family," Journal of Family and Economic Issues, Springer, vol. 43(1), pages 153-168, March.
    2. Elinder, Mikael & Erixson, Oscar & Waldenström, Daniel, 2018. "Inheritance and wealth inequality: Evidence from population registers," Journal of Public Economics, Elsevier, vol. 165(C), pages 17-30.
    3. Burlando, Alfredo & Kuhn, Michael A. & Prina, Silvia, 2023. "Too Fast, Too Furious? Digital Credit Delivery Speed and Repayment Rates," IZA Discussion Papers 16451, Institute of Labor Economics (IZA).
    4. Jason Allen & Michael Boutros & Benedict Guttman-Kenney, 2024. "Credit Card Minimum Payment Restrictions," Staff Working Papers 24-26, Bank of Canada.
    5. Mengyuan Zhou, 2022. "Does the Source of Inheritance Matter in Bequest Attitudes? Evidence from Japan," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 867-887, December.
    6. Jellal, Mohamed, 2009. "Family Institution and Filial Attention Contract," MPRA Paper 17713, University Library of Munich, Germany.
    7. repec:bla:scandj:v:103:y:2001:i:3:p:415-43 is not listed on IDEAS
    8. Nikolov, Plamen & Adelman, Alan, 2019. "Do private household transfers to the elderly respond to public pension benefits? Evidence from rural China," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    9. Laureti, Carolina & Szafarz, Ariane, 2023. "Banking regulation and costless commitment contracts for time-inconsistent agents," Economic Modelling, Elsevier, vol. 129(C).
    10. Nataliya Kusa, 2018. "Should intra-familial time transfers be compensated financially?," MAGKS Papers on Economics 201802, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    11. Meta Brown & Andrew F. Haughwout & Donghoon Lee & Wilbert Van der Klaauw, 2011. "Do we know what we owe? A comparison of borrower- and lender-reported consumer debt," Staff Reports 523, Federal Reserve Bank of New York.
    12. Olivera, Javier, 2017. "The division of inter-vivos parental transfers in Europe," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 41-51.
    13. Junya Hamaaki & Masahiro Hori & Keiko Murata, 2019. "The intra-family division of bequests and bequest motives: empirical evidence from a survey on Japanese households," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(1), pages 309-346, January.
    14. Andres Victorio, 2002. "Non-market insurance and intrafamily transfers," Applied Economics Letters, Taylor & Francis Journals, vol. 9(2), pages 99-102.
    15. Audrey Light & Kathleen McGarry, 2004. "Why Parents Play Favorites: Explanations for Unequal Bequests," American Economic Review, American Economic Association, vol. 94(5), pages 1669-1681, December.
    16. Kananurak, Papar & Sirisankanan, Aeggarchat, 2016. "Do Public Transfers Crowd-out Private Transfers? Evidence from the Thai Socio-Economic Panel Survey," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 23(2), December.
    17. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
    18. de la Briere, Benedicte & de Janvry, Alain & Lambert, Sylvie & Sadoulet, Elisabeth, 1997. "Why do migrants remit?: an analysis for the Dominican Sierra," FCND discussion papers 37, International Food Policy Research Institute (IFPRI).
    19. Grobon, Sébastien & Wolff, François-Charles, 2024. "Do public scholarships crowd out parental transfers? Evidence at the intensive margin from France," Economics of Education Review, Elsevier, vol. 98(C).
    20. Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.
    21. Cigno, A., 2016. "Conflict and Cooperation Within the Family, and Between the State and the Family, in the Provision of Old-Age Security," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 609-660, Elsevier.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jfamec:v:42:y:2021:i:4:d:10.1007_s10834-020-09731-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.