Consumer Credit and Debt

by

Lena Pellandini-Simanyi

• LAST MODIFIED: 21 June 2024
• DOI: 10.1093/obo/9780199756384-0269

Introduction

Consumer debt refers to (1) household (as opposed to corporate or sovereign) debt that is (2) acquired with the purpose of purchasing consumer goods or services (as opposed to, for instance, micro-credit for business purposes) and (3) owed towards financial institutions and retail entities (as opposed to, for instance, family members, the state, or universities) (4) through a credit contract (as opposed to unpaid bills or overdue rent). In the legal sense, consumer credit only refers to unsecured debt (e.g., payday loans, credit card debt, car purchase loans, consumer loans); however, in the sociological literature, it is used more broadly to include also secured debt, such as home equity loans and mortgages. The social studies of consumer credit and debt draw on economic sociology, economic geography, political economy, organization theory, cultural sociology, and economic anthropology to examine the social, political, and cultural causes and consequences of indebtedness. The wider theoretical concern of this inquiry is not debt per se, but to understand how debt changes our answers to long-standing sociological questions relating to inequality, social relations, cultural change, power, and the connections between economy and society. This review starts with general-scope sociological (General Overviews) and social history (Social History of Credit and Debt) studies on debt, which explicate the broader sociological and cultural significance of widespread indebtedness. The review then covers the two main strands of the social study of credit and debt. The first focuses on the institutional causes of indebtedness, examining macropolitical and cultural shifts (Debt and Cultural Theory), economic policy and institutional differences across countries (Political Economy of Credit and Debt), meso-level, institutional processes (Making of Credit Markets: Institutions and Fields), and the development of credit products and credit scoring within financial institutions (Inside Financial Institutions: Banks and the Lending Process). The second angle focuses on borrowers, looking at the consequences of indebtedness on social inequalities (Credit, Debt, and Inequality); at the credit process—how households borrow, how it changes their everyday life, how they are affected by payment difficulties—unpacking the way debt impacts subjectivities, social relationships, and oppression through lived experiences (Borrowers and the Credit Process); and at opportunities for resistance (Debt Resistance, Financial Dissent, and the New Politics of Finance). This review does not include student debt and microfinance because they are technically not consumer credit; nor does it include mortgage-backed securities, which are not credit products in themselves, but credit derivatives.

General Overviews

Carruthers and Ariovich 2010 and Burton 2008 provide accessible introductions to the sociology of credit and debt, while Carruthers 2005 gives an overview of the key scholarly debates on credit in economic sociology. Rona-Tas and Guseva 2018 and Kus 2015 discuss explanations of rising indebtedness with an international, comparative focus. Lazarus and Lacan 2020 reviews the French sociology of credit literature and relational approaches to debt. The edited collections Featherstone 2019; Deville and Seigworth 2015; and Guérin, et al. 2014 showcase current theoretical debates and empirical studies with useful introductions by the editors.

• Burton, Dawn. 2008. Credit and consumer society. London: Routledge.

  Accessibly written book that develops an integrative account of indebtedness. Subsequent chapters cover the borrower side of the market, different forms of lending, credit assessment, marketing, and debt collection and the way debt affects wellbeing.

• Carruthers, Bruce G. 2005. The sociology of money and credit. In Handbook of economic sociology. Edited by Neil J. Smelser and Richard Swedberg, 355–378. Princeton, NJ: Princeton Univ. Press.

  Review of the economic sociology literature on credit for a more expert audience. It discusses the role of trust in credit transactions, the institutionalization of different forms of lending, formal and informal debtor-creditor relations, borrower assessment, the role of the state, and legal frameworks in credit markets.

• Carruthers, Bruce G., and Laura Ariovich. 2010. Money and credit: A sociological approach. London: Polity.

  Accessible introduction to the sociological study of money and credit, with one chapter dedicated specifically to consumer credit and debt. Discusses consumer credit in a historical perspective in the context of consumer society, focusing on the lender-borrower nexus.

• Deville, Joe, and Gregory J. Seigworth, eds. 2015. Special issue: Everyday debt and credit. Cultural Studies 29.5–6.

  This double special issue of Cultural Studies contains articles that examine questions of rising debt, inequality, cultural change, and economic transformations through the everyday lived experiences and practices of debt. The editors’ introduction provides a theoretical and methodological outline of the importance of studying lived relations of credit and debt.

• Featherstone, Mark. 2019. The sociology of debt. Bristol, UK: Policy Press.

  DOI: 10.51952/9781447339533

  This edited volume includes theoretical, methodological, and empirical chapters on the sociology of debt from a cultural theory and cultural economy angle. The theoretical chapters, including the editor’s introduction, draw connections between older traditions of cultural theory and the sociology of debt. Methodological chapters cover novel, digital methods to study the process of indebtedness. The empirical chapters examine the lived experiences and the broader cultural-political narratives of neoliberalism driving indebtedness.

• Guérin, Isabelle, Solène Morvant-Roux, and Magdaléna Villarreal, eds. 2014. Microfinance, debt and over-indebtedness: Juggling with money. London and New York: Routledge.

  Although the title of this edited volume suggests that it only focuses on micro-credit, which is not technically consumer debt, it has a broader focus, with papers on the macro-, meso-, and micro-level causes of over-indebtedness, meaning-making processes, and social relations related to debt. It also covers processes through which debt relates to gender, ethnic, and income inequalities in both Northern and Southern contexts.

• Kus, Basak. 2015. Sociology of debt: States, credit markets, and indebted citizens. Sociology Compass 9.3: 212–223.

  DOI: 10.1111/soc4.12247

  Review of the main explanations of household debt in a comparative perspective. Discusses supply-side explanations of rising debt focused on lending and credit assessment and demand-side explanations focused on consumer culture, declining real wages, and broader cultural, religious, and political trends, particularly the rise of neoliberalism.

• Lazarus, Jeanne, and Laure Lacan. 2020. Toward a relational sociology of credit: An exploration of the French literature. Socio-Economic Review 18.2: 575–597.

  DOI: 10.1093/ser/mwy006

  Reviews the French sociological literature on credit and explains the relational approach to credit and debt. Highlights the social interactions on both the supply side of credit markets, embedded in organizational and legal structures, and on the demand, borrower side, embedded in local communities and households.

• Ossandón, José, Joe Deville, Jeanne Lazarus, and Mariana Luzzi. 2022. Financial oikonomization: The financial government and administration of the household. Socio-Economic Review 20.3: 1473–1500.

  DOI: 10.1093/ser/mwab031

  Ossandón and coauthors consider credit as part of the broader relationships between households and finance. They discuss four perspectives—STS-inspired social studies of finance, studies of governmentality, studies of financialization from a political economy perspective, and work on economic ethnography inspired by Zelizer—and propose a fifth one called “financial oikonomization,” referring to how households are financially administered and governed.

• Rona-Tas, Akos, and Alya Guseva. 2018. Consumer credit in comparative perspective. Annual Review of Sociology 44:55–75.

  DOI: 10.1146/annurev-soc-060116-053653

  Review of the literature on (1) the causes of rising consumer debt, (2) lending practices, including credit assessment and debt collection, and (3) the consequences of indebtedness on social relations and health. Examines cross-country differences.