UCLA faculty voice: Neuroscience helps explain American households’ $12 trillion debt

UCLA Peter Whybrow Dr. Peter Whybrow is director of the Semel Institute for Neuroscience and Human Behavior at UCLA and the author of “The Well-Tuned Brain: Neuroscience and the Life Well Lived” (out May 18 from W.W. Norton), from which this op-ed is adapted. This op-ed appeared May 10 in the Wall Street Journal. The reward circuitry of the human brain is vital to our survival, but it wasn’t built to grapple with seductive credit card offers and no-money–down mortgages. Easy credit feeds our love of immediate gratification, distorts self-regulation and diminishes prudent market behavior, creating a destabilizing positive-feedback loop. Analysts trying to understand the explosion of consumer debt should look no further than neuroscience. The total indebtedness of U.S. households at the end of last year stood at $11.83 trillion, the Federal Reserve Bank of New York has estimated. That’s up by $117 billion from the previous quarter. Credit card balances rose by $20 billion, auto loans by $21 billion, and student loans by a startling $31 billion. Falling indebtedness after the financial meltdown of 2008 was due largely to default rather than repayment. Now as restrictions on credit are easing, debt levels have begun to climb again Easy credit as an economic driver has become a Faustian bargain. A market ethos that feeds on short-term desire, low interest rates and tax systems that encourage borrowing has distorted consumer choice. But more than that, it has upended th...
Source: UCLA Newsroom: Health Sciences - Category: Universities & Medical Training Source Type: news