Blogs & Comment

Excessive debt and the media

Canadianscontinue to ramp uptheir borrowing to such an extent that their debt-to-income ratio stands at a record level of 146%, which is even higher thanthe ratio in the U.S. Many warnings over excessive borrowing have recently come out from the likes of the Bank of Canada Governor Mark Carney, TD Bank economistsand the Superintendent of Bankruptcy Canada.
Astudy released in 2010 has an interesting take on why the virtues of thrift and prudence have eroded so much in recent decades. In short, blame it on the rise of the electronic media.
Matthew Baker and Lisa George looked at the case of television in the 1950s and found that as it spread across regions, households with access to TV had faster increases in debt than households without access. It seemsexposureto TV ads increased the tendency to borrow for household goods and the tendency to carry debt.
The role of media in household debt may be greater than suggested by existing research,” conclude the authors in their paper published in the Journal of Economic Analysis & Policy.