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Mortgages and Financial Expectations: A Household‐Level Analysis

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  • Sarah Brown
  • Gaia Garino
  • Karl Taylor
Abstract
We contribute to the literature on household mortgage debt by exploring one particular influence on mortgage debt at the household level, namely the financial expectations of the individuals within the household. Our theoretical model predicts a positive association between the quantity of mortgage debt and optimistic financial expectations. Our empirical findings based on household level data provide convincing support for our theoretical priors in that optimistic financial expectations are positively associated with the level of outstanding mortgage debt.

Suggested Citation

  • Sarah Brown & Gaia Garino & Karl Taylor, 2008. "Mortgages and Financial Expectations: A Household‐Level Analysis," Southern Economic Journal, John Wiley & Sons, vol. 74(3), pages 857-878, January.
    • Handle: RePEc:wly:soecon:v:74:y:2008:i:3:p:857-878
    DOI: 10.1002/j.2325-8012.2008.tb00868.x
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    References listed on IDEAS

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    1. Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994. "Does Consumer Sentiment Forecast Household Spending? If So, Why?," American Economic Review, American Economic Association, vol. 84(5), pages 1397-1408, December.
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    Cited by:

    1. Lim, Sung Soo & Bone, Matthew, 2022. "Optimism, debt accumulation, and business growth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    2. Sarah Brown & Andy Dickerson & Jolian McHardy & Karl Taylor, 2010. "Gambling and the use of credit: an individual and household level analysis," Working Papers 2010005, The University of Sheffield, Department of Economics, revised Feb 2010.
    3. Brown, Sarah & Taylor, Karl, 2014. "Household finances and the ‘Big Five’ personality traits," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 197-212.
    4. Sarah Brown & Karl Taylor, "undated". "Reservation Wages, Expected wages and the duration of Unemployment: evidence from British Panel data," Working Papers 2009001, The University of Sheffield, Department of Economics.
    5. Sarah Brown & Karl Taylor, 2008. "Expectations, Reservation Wages And Employment: Evidence From British Panel Data," Working Papers 2008007, The University of Sheffield, Department of Economics, revised May 2008.
    6. Weiou Wu & Apostolos Fasianos & Stephen Kinsella, 2015. "Differences in Borrowing Behaviour between Core and Peripheral Economies — Economic Environment versus Financial Perceptions," Working Papers 201516, Geary Institute, University College Dublin.
    7. Sarah Brown & Andrew Dickerson & Jolian McHardy & Karl Taylor, 2012. "Gambling and credit: an individual and household level analysis for the UK," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4639-4650, December.
    8. Eva Branten, 2022. "The role of risk attitudes and expectations in household borrowing: evidence from Estonia," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 22(2), pages 126-145.

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    More about this item

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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