A few months ago, I was looking at how household debt was distributed among European countries. This new article is my first step on answering why those differences exist.
Private Debt, Public Virtues?
On the relationship between welfare and household debt.
It appears that welfare helps to stabilize economic perspectives, and contributes to make people more confident and less scared of borrowing money. This would explain the great(er) private leverage in northern European countries. In continental Europe, welfare protection is less broad, so people are more risk adverse and think twice before borrowing. In Anglo-Saxon countries, it seems there is no clear distinction between welfare and credit, like Prasad or Trumbul said, and therefore a lot of people need to borrow in order to afford universities or hospitals…