CeDEx 2022-18: The Co-holding Puzzle: New Evidence from Transactional-Level Data

Summary

Using detailed and highly disaggregated data on household finances, we examine the tendency of consumers to “co-hold” savings and debt simultaneously. The disaggregated nature of the data allows us to calculate co-holding at daily frequency. We find that coholding is rare and mostly occurs in short spells within the month, but is a persistent behavior among a subset of consumers. For this group, we find evidence in support of explanations for co-holding based upon functional mental accounting in which agents hold spending and saving accounts, while we find less support for rational explanations.

Download the paper in PDF format

Authors

John Gathergood and Arna Olafsson

View all CeDEx discussion papers | View all School of Economics featured discussion papers