Rational borrowing, irrational repaying
There may be more to debt than meets the financial eye.
What characteristics makes humans uniquely human among the animals? Many of the obvious candidates turn out to be a matter of degree, such as our intelligence, our language, or our societal structures, and our propensity to cooperate, as they are apparent in other species too. Others are contentious: some animals appear to exhibit signs of self-awareness, consciousness and emotion. However, one feature seems absent in the animal world, while being ubiquitous in much of human society: debt. Perhaps that explains why it is a concept about which we sometimes find it hard to reason.
Reluctant to borrow
A few years ago, I was involved in a project for a retail bank that operates across many countries. One of the topics was the provision of clear, accurate and helpful information about the benefits and risks of a typical financial products, such as loans, savings and investments. A particular challenge the company faced was how different attitudes to debt were in different countries. Mortgages were the most widely accepted (though not quite the norm in all countries), while unsecured personal loans, and in some countries even business loans, enjoyed remarkably little popularity.
