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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Friebel, Guido / Mendola, Mariapia / Requate, Till / Tsui, Kevin / Wichardt, Philipp / Zulehner, Christine

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The Role of Television in Household Debt: Evidence from the 1950's

Matthew J. Baker1 / Lisa M George2

1Hunter College and the Graduate Center, CUNY,

2Hunter College and the Graduate Center, CUNY,

Citation Information: The B.E. Journal of Economic Analysis & Policy. Volume 10, Issue 1, ISSN (Online) 1935-1682, DOI: 10.2202/1935-1682.2393, May 2010

Publication History

Published Online:
2010-05-07

Abstract

We examine whether advertising increases household debt by studying the initial expansion of television in the 1950's. Exploiting the idiosyncratic spread of television across markets, we use micro data from the Survey of Consumer Finances to test whether households with early access to television saw steeper debt increases than households with delayed access. Results indicate that exposure to television advertising increases the tendency to borrow for household goods and the tendency to carry debt. Television access is associated with higher debt levels for durable goods, but not with the total amount of non-mortgage debt. We provide suggestive evidence that increased labor supply may drive our results. The role of media in household debt may be greater than suggested by existing research.

Keywords: debt; television; advertising; savings; media; TV; consumption

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