Did watching television put Americans in debt?

Nov 18, 2011

A new study conducted by researchers at Hunter College reveals that the role of advertising in household consumption and debt may be greater than suggested by existing research. Drs. Matthew Baker and Lisa George (Economics) analyzed the effect of television penetration on debt using household finance measures drawn from the annual Survey of Consumer Finances covering years 1946 to 1958. Their results indicate that the appearance of television was associated with higher levels of debt for durable goods.

With a grant from the Professional Staff Congress-City University of New York (PSC-CUNY) Research Award Program, Baker and George evaluated whether television played a causal role in changing household finances or was simply correlated with unobserved market factors responsible for these changes. Exploiting exogenous variation in the timing of the spread of television across different U.S. markets, they tested whether households with early access to television saw steeper debt increases than households with delayed access.

The study finds a positive link between mass and the tendency to take on household debt. The results indicate that television exposure is associated with a higher tendency to borrow to purchase consumer goods and a higher tendency to hold non-mortgage debt. The authors also offer suggestive evidence that markets with early access to television saw higher male compared to markets with delayed access to television.

One possible reason for the link between television and is that exposure to new products on alters the tradeoff between consumption and leisure. Households may wish to both work more and purchase more consumer goods. But if they cannot adjust labor supply in the short term, they may borrow to increase consumption in the present and work more in the future.

Explore further: Study finds Illinois is most critical hub in food distribution network

More information: Baker, M.J. and L. M. George. The Role of Television in Household Debt: Evidence from the 1950's. 2009. Hunter College Department of Economics Working Papers, 427. arrow.hunter.cuny.edu/research… /HunterEconWP427.pdf

add to favorites email to friend print save as pdf

Related Stories

Chinese-Americans don't overborrow, study finds

Oct 17, 2011

Bad mortgage loans and rampant consumer debt were two of the primary causes for the recent economic recession in the U.S. Despite a national trend of debt problems, a University of Missouri researcher has found one American ...

Researcher says Chinese credit market remains underdeveloped

Aug 03, 2010

The Chinese government has made several reforms to its economic policies in recent years. Despite these reforms, a new study shows that Chinese households are not utilizing their credit market to its fullest extent. Rui Yao, ...

Recommended for you

Ancient clay seals may shed light on biblical era

8 hours ago

Impressions from ancient clay seals found at a small site in Israel east of Gaza are signs of government in an area thought to be entirely rural during the 10th century B.C., says Mississippi State University archaeologist ...

Digging up the 'Spanish Vikings'

Dec 19, 2014

The fearsome reputation of the Vikings has made them the subject of countless exhibitions, books and films - however, surprisingly little is known about their more southerly exploits in Spain.

User comments : 5

Adjust slider to filter visible comments by rank

Display comments: newest first

jerryd
not rated yet Nov 18, 2011

I use to fix TV's for a living but stopped because what should have been the best learning tool, advancement ever instead turned into a corporate wasteland where the sheep went to be programed what they 'needed'.

Sadly 80-90% of people are sheep willing to follow any fool, religion, ideolog that will let them be a part of the group.

Yet most in life is friends and family helping each other is what makes us happy costs little.
Doug_Huffman
1 / 5 (1) Nov 19, 2011
Verry interesting thesis!

We are six years TV free, with a small mortgage only that is used as an investment tool.

We do not allow logos to be visible in the house or on our clothing. Any hint of marketeering engages critical skepticism.

E. T. Jaynes' 'Converging and diverging views' explains these correlations.
FrankHerbert
0.7 / 5 (48) Nov 23, 2011
So basically what you are saying, Doug, is that you live like a hippy. Neat. You have some watermelon on your face.
antialias_physorg
5 / 5 (1) Nov 23, 2011
Why is living without a TV equal to being a hippy?

I recently moved and don't plan on buying a TV. (Bought the appartment only after I had the entire money up front)

Watching TV has given me an 'advertisement allergy' overthe years (i.e. whenever I hear advertisement on the radio or see one on a TV screen I have the urge to leave the room or change the channel)

Praise be to Adblock, junkmail filters and the internet (and DVDs...though the mandatory trailers, endless company logos before the movie even starts, and copyright notices are already getting on my nerves there, too).

No mortage, no debts - and plan on keeping it that way. Before I'll take on a loan I'd rather reduce my lifestyle.
FrankHerbert
0.8 / 5 (49) Nov 23, 2011
It was actually this that caused me to make the hippy comment.

We do not allow logos to be visible in the house or on our clothing. Any hint of marketeering engages critical skepticism.


It's one thing to avoid advertising (i.e. avoiding television). It's another to ban it from your vision. I've only known hippies to take anti-consumerism to such an extreme. I understand the anti-consumerist mindset, however going that far to me is an admission of a weak mind (i.e. "A t-shirt is enough to brainwash me, my children, etc.").

I also found Doug's mindset ironic as he is one of our resident Champions of the Free Market. It's ironic that functionally, on this subject which is pertinent to the economy, he is no different than a hippy. Just goes to show you we aren't all as different as we think we are.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.