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Speculation and Education – An Overlooked Connection?

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Overall, the percentage of Americans who were paying more than 40 percent of their income for debts like mortgages and credit card bills increased from about 17 percent in 1992 to 27 percent in 2008, but according to research done by Sherman Hanna, a professor of consumer sciences at Ohio State University, and his colleagues, it was those who were college-educated who were more likely than those with high school or less education to be above this 40 percent threshold – considered to be a risky amount of debt for most households (Hanna et al., 2016).


Conducting two separate studies, the Hanna and his team used data from six rounds of the U.S. Survey of Consumer Finances held between 1992 and 2007, which included a total of 25,889 households to identify those that were paying more than 40 percent of their yearly income to pay off debt, including rent or mortgage, vehicle leases or loan payments, property taxes, credit cards, student loans and more. These were defined as households with a heavy debt burden.


The researchers were then able to draw several conclusions. Among them, was that the debt crisis didn’t just involve homeowners who took out bigger mortgages than they could afford, but that 35 percent of renters had a heavy debt burden in 2007, compared to 21 percent of homeowners (Hanna et al., 2016). Further, the association between more education and higher debt, Hanna and his team found, was true even after taking into account the fact that people with more education tend to have higher incomes. Moreover, people who reported being more optimistic about the future of the economy for the next five years were more likely to have a heavy debt burden (Hanna et al., 2016).


“People who piled on debt may have been too optimistic about their economic future, but you can’t blame that on a lack of education” (Hanna, 2016).


Hanna notes that a tendency of people with college education is to think they are immune to any economic problems. “But”, he says “when people stop believing things might go bad, that’s when they get in trouble” (Hanna, 2016).


The takeaway is that despite generally held assumptions, it wasn’t just uneducated people, and not just homeowners, who precipitated the financial crisis by taking on too much debt.


“All types of households, renters and homeowners, educated and not, were taking on more of debt burden than they could bear. And lenders of all types – not just mortgage lenders – seemed to be taking more risks” (Hanna, 2016).


Hanna explains, “We just can’t blame the lenders and say they were exploiting uneducated people who didn’t know better. Many of those who got in over their heads were highly educated” (Hanna, 2016).


“It shows that the financial crisis wasn’t all about housing speculation. There was too much debt in all parts of the economy” (Hanna, 2016).


Thinking that education may buffer risky financial behavior and keep us out of debt may be just one the many assumptions we make about our ability to handle money.

Speculation and Education – An Overlooked Connection?

Claire Dorotik-Nana, LMFT

Claire Dorotik-Nana LMFT is a licensed marriage and family therapist specializing in post-traumatic growth, leveraging adversity, and other epic human achievements. Claire has written multiple continuing education courses for Professional Development Resources, Zur Institute, and International Sport Science Association. Claire has also authored multiple books, including:
Leverage: The Science of Turning Setbacks into Springboards and On The Back Of A Horse: Harnessing The Healing Power Of The Human-Equine Bond. For more information about Leveraging Adversity or Claire, visit

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APA Reference
Dorotik-Nana, C. (2019). Speculation and Education – An Overlooked Connection?. Psych Central. Retrieved on October 23, 2020, from


Last updated: 23 Jun 2019
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