Djamila Daoudi,

Universidade de Santiago de Compostela, Santiago de Compostela, Spain

E-mail: djamila.daoudi@rai.usc.es

ORCID 0000-0003-2815-1866

The influence of sociability over non-mortgage debt

Sara Fernández-López,

Universidade de Santiago de Compostela, Santiago de Compostela, Spain

E-mail: sara.fernandez.lopez@usc.es

ORCID 0000-0003-2496-4333

Lucía Rey-Ares,

Universidade da Coruña, Ferrol, Spain, 

E-mail: lucia.rey.ares@udc.es

ORCID 0000-0002-5165-742X

Sandra Castro-González,

Universidade de Santiago de Compostela, Lugo, Spain, 

E-mail: sandra.castro@usc.es

ORCID 0000-0002-8206-1776

Abstract. In recent years, especially after the recent economic downturn, household debt has increased in importance, due to its influence on the economy in general and on households’ wellbeing in particular. Therefore, the study of household debt turns out to be necessary in order to know what leads to its demand, and thus to avoid situations of over-indebtedness. In this regard, previous research has analysed debt decisions from different approaches, however, the effect of individuals’ sociability has been neglected in literature. To this end, the aim of this paper is to analyse the effect of sociability on the Europeans’ decision to incur non-mortgage debt. The study sample, taken from the sixth wave (year 2015) of the Survey of Health, Ageing and Retirement in Europe, consists of 68,231 people from 18 European countries and also Israel. After applying probit binomial models, empirical evidence confirms the non-negligible effect of sociability on households’ non-mortgage debts. However, this effect depends on the underlying mechanisms through which sociability operates. Thus, when the sociability variable reflects learning based on the transmission of information (or 'word of mouth'), its influence over non-mortgage debt is positive, whereas when sociability reflects learning based on observation, the effect is negative.

Received: March, 2019

1st Revision: October, 2019

Accepted: December, 2019

DOI: 10.14254/2071-789X.2019/12-4/19

JEL Classification: G40, G41

Keywords: consumer debt, sociability, behavioural finance, Europe, SHARE