Debt and the safety net: Personal borrowing in the shifting landscape of public responsibility

Over the past thirty years, as the rise in the cost-of-living has outpaced earnings and the welfare state has undergone a major transformation from providing a social safety to promoting personal responsibility, growing numbers of families and individuals have resorted to acquiring more debt to cover living expenses. This dissertation examines the relationship between personal debt and changes in the welfare state, across nations and within the United States. The trend of short-term borrowing in the context of public spending on social benefits is examined using data from Organisation for Economic Cooperation and Development (OECD). An inverse relationship between public spending and consumer debt was predicted but did not appear. Instead, a patterning of the public spending/consumer debt types loosely based on Esping-Andersen's 1990 welfare state regime typology emerged, with liberal welfare states tending to have more consumer debt than conservative or social democratic states. In the United States, credit card debt and ownership of credit cards by social assistance recipients have risen steadily over the past 20 years. Furthermore, analyses revealed clear and significant demographic and economic behavioral characteristics of payday loan borrowers, namely that social assistance recipients are approximately three times more likely than non-recipients to take out a payday loan.