BEYOND REASONABLE DEBT
The extent to which financial behaviour can explain over-indebtedness amongst New Zealand families

A joint Families Commission and Retirement Commission report
Research Report No 3/09 August 2009
ISSN 1179-1289 (Online)
ISBN 978-0-478-32846-2 (Online)

Contents

Acknowledgements

Overview

1. Introduction

2. Family over-indebtedness in the Living Standards Survey 2004

• 2.1. Living Standards Survey 2004
• 2.2. Families in the Living Standards Survey 2004
• 2.3. Over-indebtedness in the Living Standards Survey 2004
• 2.4 Summary

3. The role of financial behaviour

• 3.1. Basic model
• 3.2. Theory and evidence
• 3.3. Behaviour in the Living Standards Survey 2004
• 3.4. Estimation
• 3.5. Results
• 3.6. Summary

4. The confounding effects of family and financial circumstances

• 4.1. Theory and evidence
• 4.2. Extended model
• 4.3. Confounding variables in the Living Standards Survey 2004
• 4.4. Estimation
• 4.5. Results
• 4.6. Summary

5. Implications for policy

6. Conclusions

References

Figures

Figure 1: Proportion of families in financial strain
Figure 2: Defining problem debt
Figure 3: Proportion of families with different financial behaviour reported ‘most’ or ‘all’ of the time
Figure 4: Saving and spending behaviour
Figure 5: Behaviour and strain
Figure 6: Marginal effects of explanatory variables in bivariate regressions
Figure 7: Marginal effects of explanatory variables in multivariate regressions