The Role of Television in Household Debt: Evidence from the 1950’s

We examine whether advertising increases household debt by studying the initial expansion of television in the 1950’s. Exploiting the idiosyncratic spread of television across markets, we use microdata from the Survey of Consumer Finances to test whether households with early access to television saw steeper debt increases than households with delayed access. Results indicate that television increases the tendency to borrow for household goods and to carry debt. Television is associated with higher debt levels for durable goods, but not with total non-mortgage debt. The role of media in household debt may be greater than suggested by existing research. * This work was supported in part by a grant from the City University of New York PSC-CUNY Research Award Program. † Matthew J. Baker, Department of Economics, Hunter College, 695 Park Ave., New York, NY 10065. Email: [email protected]. ‡ Lisa M. George, Department of Economics, Hunter College, 695 Park Ave., New York, NY 10065. Email: [email protected]. The process of persuading people to incur debt, and the arrangement for them to do so, are as much a part of modern production as the making of the goods and the nurturing of wants. John Kenneth Galbraith, The Affluent Society, 1958