Open Access Journal Article

Student loan debt and U.S. married households’ stock investment decisions

by Thomas Korankye a,* orcid
a
Personal and Family Financial Planning, Norton School of Human Ecology, The University of Arizona, Tucson, USA
*
Author to whom correspondence should be addressed.
Received: 28 February 2023 / Accepted: 8 July 2023 / Published Online: 20 July 2023

Abstract

This study aims to examine the effects of student loan debt on the decisions of U.S. married households to invest in stocks located in non-retirement accounts. Using longitudinal datasets from the 2011 to 2017 U.S. Panel Study of Income Dynamics and a fixed effects logit model, the results show mixed findings. The presence of student debt decreases the probability that married households will own stocks, but the amount of student debt does not show a statistically significant effect. The findings suggest that the incidence of student debt raises the perception of liquidity constraints and debt burden among married households.


Copyright: © 2023 by Korankye. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

Share and Cite

ACS Style
Korankye, T. Student loan debt and U.S. married households’ stock investment decisions. Economic Analysis Letters, 2023, 2, 37. https://doi.org/10.58567/eal02040003
AMA Style
Korankye T. Student loan debt and U.S. married households’ stock investment decisions. Economic Analysis Letters; 2023, 2(4):37. https://doi.org/10.58567/eal02040003
Chicago/Turabian Style
Korankye, Thomas 2023. "Student loan debt and U.S. married households’ stock investment decisions" Economic Analysis Letters 2, no.4:37. https://doi.org/10.58567/eal02040003
APA style
Korankye, T. (2023). Student loan debt and U.S. married households’ stock investment decisions. Economic Analysis Letters, 2(4), 37. https://doi.org/10.58567/eal02040003

Article Metrics

Article Access Statistics

References

  1. Arbor, A. (2019). Panel Study of Income Dynamics, public use dataset. Ann Arbor: Institute for Social Research, University of Michigan.
  2. Becker, G. S. (1993). Human Capital: A Theoretical and Empirical Analysis, With Special Reference to Education (3rd edition). Chicago, IL: University of Chicago Press.
  3. Boscaljon, Brian. (2004). Time, Wealth, and Human Capital as Determinants of Asset Allocation. Financial Services Review, 13(3), 167-184.
  4. Bricker, J., Dettling, L. J., Henriques, A., Hsu, J. W., Jacobs, L., Moore, K. B., ... & Windle, R. A. (2017). Changes in US Family Finances from 2013 to 2016: Evidence from the Survey of Consumer Finances. Fed. Res. Bull., 103(3), 1-41. https://doi.org/10.17016/bulletin.2017.103-3
  5. Campbell, J. (2006). Household Finance. Journal of Finance, 61(4), 1553-1604. https://doi.org/10.1111/j.1540-6261.2006.00883.x
  6. Calvet, L. E., Campbell, J. Y., & Sodini, P. (2009). Measuring the Financial Sophistication of Households. American Economic Review, 99(2), 393-398. https://doi.org/10.1257/aer.99.2.393
  7. Cocco, J. F. (2005). Portfolio Choice in the Presence of Housing. The Review of Financial Studies, 18(2), 535-567. https://doi.org/10.1093/rfs/hhi006
  8. Cooper, R., & Zhu, G. (2016). Household Finance Over the Life-Cycle: What Does Education Contribute? Review of Economic Dynamics, 20, 63-89. https://doi.org/10.1016/j.red.2015.12.001
  9. Faig, M., & Shum, P. (2002). Portfolio Choice in the Presence of Personal Illiquid Projects. The Journal of Finance, 57(1), 303-328. https://doi.org/10.1111/1540-6261.00423
  10. Federal Reserve Bank of New York (2021). Household debt and credit report (Q2 2021). Center for microeconomic data. Retrieved from https://www.newyorkfed.org/microeconomics/hhdc
  11. Georgarakos, D., & Pasini, G. (2011). Trust, sociability, and Stock Market Participation. Review of Finance, 15(4), 693-725. https://doi.org/10.1093/rof/rfr028
  12. Grinblatt, M., Keloharju, M., & Linnainmaa, J. (2011). IQ and Stock Market Participation. The Journal of Finance, 66(6), 2121-2164. https://doi.org/10.1111/j.1540-6261.2011.01701.x
  13. Guiso, L., & Jappelli, T. (2005). Awareness and Stock Market Participation. Review of Finance, 9(4), 537-567. https://doi.org/10.1007/s10679-005-5000-8
  14. Guiso, L., & Sodini, P. (2012). Household Finance. An Emerging Field. IDEAS Working Paper Series from RePEc, IDEAS Working Paper Series from RePEc, 2012.
  15. Guiso, Sapienza, & Zingales. (2008). Trusting the Stock Market. Journal of Finance, 63(6), 2557-2600. https://doi.org/10.1111/j.1540-6261.2008.01408.x
  16. Haliassos, M. (2003). Stockholding: Recent Lessons from Theory and Computations. In Stockholding in Europe (pp. 30-49). Palgrave Macmillan, London.
  17. Haliassos, M., & Michaelides, A. (2003). Portfolio Choice and Liquidity Constraints. International Economic Review, 44(1), 143-177. https://doi.org/10.1111/1468-2354.t01-1-00065
  18. Hong, H., Kubik, J. D., & Stein, J. C. (2004). Social interaction and stock‐market participation. The Journal of Finance, 59(1), 137-163. https://doi.org/10.1111/j.1540-6261.2004.00629.x
  19. Kim, J., & Chatterjee, S. (2019). Student Loans, Health, and Life Satisfaction of US Households: Evidence from a Panel Study. Journal of Family and Economic Issues, 1-15. https://doi.org/10.1007/s10834-018-9594-3
  20. Kim, J., Gutter, M. S., & Spangler, T. (2017). Review of Family Financial Decision Making: Suggestions for Future Research and Implications for Financial Education. Journal of Financial Counseling and Planning, 28(2), 253-267. https://doi.org/10.1891/1052-3073.28.2.253
  21. Korankye, & Kalenkoski, C. M. (2021a). The Effect of Households’ Student Debt on Life Satisfaction. Journal of Family and Economic Issues, 42(4), 757–772. https://doi.org/10.1007/s10834-021-09753-
  22. Korankye, T., & Kalenkoski, C. M. (2021b). Student Loan Debt and Financial Well-Being of the Borrower: Does It Matter Whom the Debt Is For?. Journal of Personal Finance, 20(2). https://ssrn.com/abstract=4055654
  23. Korankye, T., & Guillemette, M. (2021). Student Debt and Stock-Ownership Decisions of US Households. Applied Economics Letters, 28(5), 387-390. https://doi.org/10.1080/13504851.2020.1757026
  24. Merton, R. (1973). An Intertemporal Capital Asset Pricing Model. Econometrica, 41(5), 867-887.
  25. Pearson, B., Korankye, T., & Salehi, H. (2021). Comparative Advantage in the Household: Should One Person Specialize in a Household’s Financial Matters?. Journal of Family and Economic Issues, 44 (1), 114-124. https://doi.org/10.1007/s10834-021-09807-y
  26. Vohra, T., & Kaur, M. (2016). Awareness and Stock Market Participation of Women: A Comparative Study of Stock Investors and Non-Investors. IUP Journal of Management Research, 15(4), 22-38. https://web.s.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=0&sid=8ff3b055-9791-4de1-a303-08c77b31c4d4%40redis