This project explores how indebtedness affects inequality directly through the effect of credit (or lack of credit) on decisions about labor supply (and earnings) and education choices and indirectly by changing voters’ appetite for economic redistribution and views about the role of government/society. To do so, the researchers plan to exploit different “shocks” to individuals’ debt status or to their opportunity to take on debt. In particular, they will look at: 

1. debt relief, which removes individual debt for successful applicants, 
2. student aid reforms that make taking on student debt more (or less) attractive, and 
3. the introduction of interest-only mortgages, which creates an extra incentive to borrow.

They examine the effects of these “shocks” on economic inequality and political preferences by combining detailed administrative data on debt with election returns and original survey data